Takeda Pharmaceutical Company Limited 2023 Earnings Call

Christopher O'Reilly: 本日は大変お忙しい中、武田薬品工業の2022年度決算説明会にご参加いただき、誠にありがとうございます。私は本日司会を務めます、IRヘッドのオライリーと申します。よろしくお願いいたします。まず、言語設定についてご説明いたします。ZoomウィンドウのF下の方に言語ボタンがございます。日本語でお聞きになりたい方は日本語、英語でお聞きになりたい方は英語、または生の音声をお聞きしたい方はオフにしていただければ幸いです。For those of you who wish to listen to the call in English, please select English in the Zoom language select button.

Christopher O'Reilly: 本日のカンファレンスコールでは、米国の1995年民事証券訴訟改革法で規定される将来に関する見通し情報を議論させていただくことを皆様にお伝え申し上げます。実際の結果は、本日議論される結果と大きく異なる場合があります。実際の結果を大きく異なるものにする可能性のある要因については、最新のForm 20-FおよびそのほかのSECへの提出書類に記載されております。なお、本日のコールでは、国際会計基準、IFRSに準拠しない財務指標も議論することがございます。この指標の定義および調整表につきましては、プレゼンテーションのAppendixをご参照ください。本日のプレゼンテーション資料の2ページの重要な注意事項もご確認お願い申し上げます。それでは、本日のプレゼンテーションに移りたいと思います。社長CEOのクリストフ・ウェバー、R&DプレジデントのアンディP・プランプ、Chief Financial Officerのコスタス・ルルコスよりプレゼンをさせていただきます。その後、質疑応答の時間を設けております。それでは始めたいと思います。Christophe, over to you.

Christophe Weber: Thank you, Chris. Thank you everyone for joining us today. It's a great pleasure to be with you. Fiscal year 2022 has been a very successful year, during which we have been putting our corporate philosophy into action to create long-term business and societal value. Everything we do is guided by our values, brought to life through action based on patient, trust, reputation, and business, in that order. This is fundamental to our strategy, our identity, and our culture. We have been steadily executing towards our vision to discover and deliver life-transforming treatments with a commitment to patients, our people, and the planet. A good example is how we have chosen to price our recently approved dengue vaccines, QDENGA. We are prioritizing countries with the highest burden of disease and where barriers to access to medicines and vaccines are particularly complex.

Christophe Weber: In line with our tier pricing strategy, we will adjust QDENGA price according to a country's economic stage and health system maturity to ensure broader access. For example, the private market price for QDENGA in Indonesia will be about one third its European price, and far lower than other innovative vaccines in Indonesia. With regard to our people in priority, our intention is to create an exceptional, inclusive people experience wherever we work. For our colleagues who can work virtually as well as in our offices, we emphasize effectiveness, flexibility, and inclusion with fit-for-purpose and regular face-to-face interaction, and are leveraging data and insight to inform our approach. We are also committed to delivering a high standard of environmental leadership, and we made important progress toward our greenhouse gas emission goals in fiscal year 2022.

Christophe Weber: As an example of the multiple initiatives we have underway, in March this year, we officially opened our first positive energy manufacturing support building at our site in Singapore. This building actually produces more electricity than it consumes, and it is the first of its kind in the biopharmaceutical industry in Singapore. In the US, our virtual power purchase agreement with Enel North America is expected to create up to 350,000 MWh of renewable energies credit per year. That accounts for approximately 20% of Takeda's current enterprise scope 1 and 2 greenhouse gas emission. We are also doubling down on our investment in data technology and AI with a 10% investment increase in 2022 to improve our productivity across our entire value chain.

Christophe Weber: In these ways, through our core business, Takeda is creating long-term value for patients, shareholders, and society while making a positive impact on our people, communities, and the planet. Turning to slide five, to our financial performance. I am pleased to say that fiscal year 2022 was an excellent year for Takeda, as we delivered or exceeded management guidance for revenue and profit growth. On the top line, we booked revenue of more than JPY 4 trillion for the first time, representing core growth of 3.5% at the constant exchange rate. This performance was driven by our growth and launch products, which increased 19% at a constant exchange rate, and now represent 40% of our total revenue. Core operating profit was nearly JPY 1.2 trillion, representing growth of 9.1% at the constant exchange rate. Core earnings per share was JPY 558, with growth of 13.9% at the constant exchange rate.

Christophe Weber: I also want to highlight our continued progress in reducing our debt. We have now brought our leverage ratio down to 2.6. This includes the impact of the $3 billion payment we made in Q4 to acquire TAK-279 from Nimbus. Excluding that, we will have reached 2.3 times, or the low twos target we set as one of our key financial metrics commitment after the Shire acquisition. This achievement enable us to pivot to a new phase of investing for growth and shareholder returns. Moving to the right-hand side of the slide and our pipeline progress. In fiscal year 2022, our dengue vaccine, Qdenga, received approval in multiple countries, including Indonesia, the European Union, UK, and Brazil. We have since received additional approvals in Argentina and Thailand, and have launched in a number of European and Nordic countries.

This includes the impact of a $3 billion without payments, we made in Q4 to acquire seven nine of Nimbus.

Excluding that we would have reached two three times at the low twos target, we set as one of our key financial metrics commitments after the Shire acquisition.

This achievement enabled us to pivot to a new phase of investing for growth and shareholder returns.

Moving to the right hand side of the slide and our pipeline progress in fiscal year 2022, our dengue vaccines to Danielle we received approval in multiple countries and continued North Asia reopened Union U K and Brazilian real.

We have since received additional approvals in Argentina in Taiwan, and have launched a number of European and Nordic countries.

Christophe Weber: The US FDA also accepted QDENGA for priority review. We are looking forward to a potential approval in the US and to expanding access to these vaccines to other regions later this year. Also this year, we have positive late-stage clinical trial data read out for TAK-755 and fazirsiran. Based on favorable interim phase III result, we are on track towards the filing of TAK-755 as a treatment for congenital thrombotic thrombocytopenic purpura, or TTP, a rare blood clotting disorder with limited therapeutic option. We also announced positive phase II result for fazirsiran in alpha-1 antitrypsin deficiency-associated liver disease. This year, we have begun dosing patients in the phase III studies. Our ORX franchise is also advancing. We began a phase II-B study for TAK-861 in narcolepsy type 1 and type 2, published positive phase I data for TAK-925 in a post-anesthesia setting.

The U S. FDA also accepted to then get a priority review and we are looking forward to a potential approval in the U S and to expanding access to these vaccines to other regions later this year.

Also this year, we are acquisitive late stage clinical trial data readout for Tak 700 by five and for this year.

Based on the February I believe during phase III reserved we are on track towards the filing of tax of 155 as a treatment for congenital thrombotic thrombocytopenic purpura or TTP around block cookies are dealt with limited therapeutic options.

We also announced positive phase two results for this year and as I wanted to trypsin deficiency associated liver disease and this year, we have begun dosing patients in our phase III studies.

Our key franchises and <unk>, we began a phase II B study for Tak six one in narcolepsy type one and type two.

And third is positive phase one data for <unk> nine to five in a post anesthesia.

Christophe Weber: We continue to strengthen our pipeline with external opportunities to complement our innovative internal R&D engine. This includes the acquisition of TAK-279 for immune-mediated disease, as well as in-licensing agreement for fruquintinib for colorectal cancer and TAK-227 for celiac disease. We are optimistic about these late-stage programs and the potential of these molecules to bring meaningful advancement for patients. Looking ahead to fiscal year 2023 on slide six. We have been communicating for some time that this coming year will be challenging due to the impact from loss of exclusivity, most significantly VYVANSE in the US and AZILVA in Japan. However, these are temporary headwinds and do not alter the momentum of our growth on launch products, nor our excitement in the pipeline to deliver medium and long-term growth.

We continue to strengthen our pipeline with external opportunities to complement our innovative internal R&D engine.

This included the acquisition of <unk> 79 for immune mediated disease as well as in licensing agreement for cookies for colorectal cancer and type 227 for celiac disease.

We are optimistic about these late stage programs and the potential of this molecule to bring meaningful advancement for patients.

Looking ahead to fiscal year 2023 on slide six.

We have been communicating for some time that this coming year will be challenging due to the impact from loss of exclusivity.

Most significantly vyvanse in the U S and as the advantage of that.

However, this hour compulsory headwinds and newness out there the momentum of our growth hormone products no our excitement in the pipeline to deliver a major and long term growth.

Christophe Weber: As a result of the strong deleveraging progress I highlighted on the previous slide, we are now entering a new phase for the company in term of capital allocation. I am pleased to announce a planned dividend increase from JPY 180 to JPY 188 per share in fiscal year 2023, underscoring our confidence to grow beyond the near-term challenges in fiscal 2023. With regard to our guidance for the coming year, for revenue, we expect momentum from our growth on launch products to largely offset the impact of generic entrants. However, we do have an additional headwinds from COVID-19 vaccines expectation. In fiscal year 2022, we actually exceeded our revenue forecast for COVID-19 vaccines in Japan with almost JPY 60 billion in sales. As a result of softening demand and the government cancellation of their order for NUVAXOVID, we now expect fiscal year 2023 revenue to be minimal.

As a result of the strong deleveraging progress I highlighted on the previous slide we are now entering a new phase for the company in terms of capital allocation.

I'm pleased to announce a plan dividend increase from 108 to 180 ATM per share in fiscal year 2023.

Underscoring our confidence to grow beyond the near term challenges in fiscal 2023.

With regard to our guidance for the coming year for revenue, we expect momentum from our growth products to largely offset the impact of generic entrants. However.

However, we do have an additional headwinds from COVID-19 vaccines expectation.

In fiscal year, Consequently, too we actually exceeded our revenue forecast of COVID-19 vaccines in Japan with almost 60 billion in sales.

But as a result of softening demand and local element constellation of their order for <unk>. We now expect fiscal year 2023 revenue to be minimal.

Christophe Weber: As a result, our management guidance is for core revenue to decline by low single-digit percentage at the constant exchange rate, with COVID-19 vaccine being the main difference from our previously communicated goal of holding revenue flat this year. With regard to profits, we do expect an impact from losing the high-margin product to a generic in 2023. We are doubling down on OpEx discipline to limit the impact as much as possible. That said, we are not holding back from making the necessary investments to secure future growth. We continue to invest in R&D and data and technology to secure Takeda long-term competitiveness. Although we expect core operating profit to decline in the low 10 percentile, we are still forecasting an absolute amount of more than JPY 1 trillion. Core EPS is expected to be JPY 434.

As a result, our management guidance for core revenue to decline by low single digit percentage at a constant exchange rate with COVID-19 vaccine being the main difference from our previously communicated goal of holding revenue flat this year.

With regard to profits, we do expect an impact from losing the high margin product reengineering in 2023, but we are looking down on opex discipline to limit the impact as much as placebo.

That said, we are not holding back from making the necessary investments to secure future growth and we continue to invest in R&D and advanced technology to secure that affected our long term competitiveness.

Although we expect carpeting profit to decline in the low 10 percentile, we are still forecasting an absolute amount of more than one trillion.

Core EPS is expected to be 434 million.

Christophe Weber: After several years of business transformation, integration, and deleveraging, we have built competitive global scale with a strong financial foundation and are confident in our future growth. This enables us to pivot our capital allocation policy to place less emphasis on rapid debt paydown, instead allocate more capital towards growth investments and shareholder returns. This includes the adoption of a progressive dividend policy, which means that going forward, we intend to increase or maintain our dividend every year, reflecting a new chapter for Takeda, with a clear focus on investing for growth and shareholder return. Moving to the right of the slide, our upcoming pipeline milestones also support our confidence in the future. First, we are expecting some significant life cycle management expansion this fiscal year, as we anticipate regulatory decision in the US for ENTYVIO subcutaneous formulation for ulcerative colitis, and for Alofisel and GAMMAGARD LIQUID for CIDP.

After several years of business transformation integration and deleveraging, we have been competitive group of scale with a strong financial foundation and our confidence in our future growth.

This enabled us to pivot our capital allocation policy to place less emphasizes and rapid debt paydown and instead allocate more capital towards growth investments and shareholder returns.

This includes the adoption of the progressive dividend policy, which means that going forward, we intend to increase or maintain our dividend every year, reflecting a new chapter for decades with a clear focus on investing for growth and shareholder return.

Moving to the right of this slide our upcoming pipeline milestones are suppose to part of our confidence in the future.

First we are expecting some significant lifecycle management expansion this fiscal year as we anticipated regulatory decision in the U S for <unk>, so continuous calculation for ulcerative colitis and for IQ beyond going back a liquid for CIBC.

Christophe Weber: We also expect the readout for Alofisel phase III ADMIRE-CD study, which we believe will support the US filing of this highly innovative cell therapy for complex perianal fistula. As I mentioned, we also anticipate further approval decision for QDENGA, including in the US, as well as an approval decision in the US for TAK-755 for cTTP. Lastly, we expect to obtain phase II-B results for TAK-279 in psoriatic arthritis and initiate a pivotal phase III program in psoriasis. Andy will share additional information on these programs later in the presentation. Turning to slide seven on our high-level outlook for the near, medium, and long term. Based on our current assumption for fiscal 2023, we expect to return to revenue, profit, and margin growth in the near term, driven by continued expansion of our growth and launch products, such as ENTYVIO, TAKHZYRO, LIVTENCITY, and our Plasma-Derived Therapies.

We also expect the readout for <unk> phase III <unk> study, which we believe we still got the U S. By any of these tiny <unk> cell therapy for complex Purion order fistula.

And as I mentioned, we also anticipate further approval decision for Katanga, including in the U S as well as an approval decision in the U S opex of impact therefore CGP.

Lastly, we expect to obtain phase <unk> results for Tak 709 in Psoriatic arthritis, and initiate the pivotal phase III programs <unk>.

Andy will share additional information on these programs later in the presentation.

Turning to slide seven I'll now our high level outlook for the near major and long term.

Based on our current assumptions for fiscal 2023, we expect to return to revenue profit and margin growth in the NAFTA driven by continued expansion of our growth on those products.

As TVO zero distance CTG and our customer device therapies.

Christophe Weber: We will also start to see meaningful contribution from QDENGA. We are also excited about our late-stage pipeline and anticipate significant milestone in 2023 and onwards, as I have already touched upon. Following the temporary generic headwinds we faced this year, we have no significant loss of exclusivity exposure until the launch of ENTYVIO biosimilars, which could be as late as 2032. Therefore, the momentum from our growth on launch products, coupled with new launches from the pipeline, will continue to drive growth into the medium term. Beyond that, we expect our investment in R&D to continue to pay off in the medium and long term, with progress in our clinical pipeline. As we look to the future, we remain committed to returning to a core operating profit margin in the low to mid-30s, supported by productivity improvement driven by data, digital, and technology.

So start to see meaningful contribution from <unk>.

We are so excited about our late stage pipeline and anticipating getting of milestone in 'twenty three and onwards.

As I have already such of them.

Following the temporary generic headwinds we faced this year, we have no significant loss of exclusivity exposure until the launch of <unk>, which could be as late as 2032.

And therefore, the momentum from our growth and launch products, coupled with new launches from the pipeline will continue to drive growth into the medium term.

Beyond that we expect our investments in R&D to continue to pay off in the medium and long term with progress in our clinical pipeline.

As we look to the future we remain committed to returning to our core operating profit margin in the low to mid thirties supported by productivity improvements driven by desktop digital and technology.

Christophe Weber: We will also continue to evaluate asset-specific business development opportunities to further enhance the pipeline and reinforce our growth profile. Finally, as I mentioned, our updated capital allocation policy includes our progressive dividend policy of increasing or maintaining our dividend each year. In closing, fiscal year 2022 was a year of growth and strategy execution. We continue to deliver on our long-term commitment, progress our pipeline, and return value to our stakeholders, while living up to our values and bringing life-transforming treatments to patients. With that, I will turn the call over to Andy to update you on our pipeline. Thank you.

We will also continue to evaluate asset specific business development opportunities to further enhance our pipeline and reinforce our growth profile.

Finally, as I mentioned, our basic capital allocation precinct with our progressive dividend policy of increasing or maintaining our dividend each year.

In closing fiscal year, 2022 was a year of growth and strategy Decretion.

We continue to deliver on our long term commitment to progress our pipeline and return value to our stakeholders.

Why leading up to our values and bringing life transforming treatments to patients.

With that I will turn the Accredo vessel and to update you on our pipeline. Thank you.

Andy Plump: Thank you very much, Christophe. Hello to everyone on today's call. If we can go to the next slide, please, slide nine. We continued to build forward momentum with our innovative pipeline this past year. I'm very excited to share our progress and highlight major milestones achieved in fiscal year 2022, as well as highlight expected major events in the coming year, 2023. As Christophe mentioned, we had multiple pipeline successes this past year. We received several approvals for QDENGA in endemic markets. We also had approval in Europe and a positive CHMP opinion that could support the approval in eight additional dengue endemic countries participating in the first-ever EU-M4all procedure. The WHO estimates around 4 billion people are at risk of dengue infection globally, with an estimated 400 million infections, 500,000 hospitalizations, and 25,000 deaths each year, and most of these deaths occurring in children.

Thank you very much Christophe and Hello to everyone on today's pop you can go to the next slide slide nine.

We continue to build forward momentum with our innovative pipeline. This past year I am very excited to share our progress and highlight major milestones achieved in fiscal year 2022, as well as highlight expected major events in the coming year 2023 at.

As Christophe mentioned, we had multiple pipeline successes. This past year, we received several approvals for <unk> in endemic markets. We also had approval in Europe , and a positive <unk> opinion that could support the approval in eight additional dengue endemic countries participating in the first ever <unk>.

Medicines for all procedure.

The <unk> estimates around 1 billion people are at risk of dengue infection globally with an estimated 400 million infections 500000, hospitalizations and 25000 deaths each year in most of these deaths occurring in children.

Andy Plump: In our four-and-a-half-year TIDES clinical outcomes trial, QDENGA demonstrated an 84% reduction in hospitalizations. As we work to provide broad access to endemic regions around the world, we now have the potential to significantly reduce the hospitalizations and deaths caused by dengue infection in the decades to come. We also had a number of positive study readouts that further advanced our pipeline this year, and as Christophe mentioned, these include a phase III readout for TAK-755, a phase II readout for fazirsiran, and proof-of-concept data for our orexin franchise. These positive studies support important program stage-ups. We are on track to file TAK-755 for the treatment of congenital cTTP in the US, with submissions in other regions to follow. We initiated a phase III pivotal trial for fazirsiran.

Therefore in a half year tied to clinical outcomes trial <unk> demonstrated an 84% reduction in hospitalizations as we work to provide broad access to indent endemic regions around the world. We now have the potential to significantly reduce the hospitalizations and deaths caused by ganging catch.

And in the decades to come.

Also had a number of positive study readouts that further advanced our pipeline this year and as Christophe mentioned. These include a phase III readout for Tak 755, a phase III readout for <unk> and proof of concept data for our Orexin franchise.

Positive study support important program stage apps, we are on track to file Tak 755 for the treatment of congenital GGP in the U S with submissions in other regions to follow we initiated a phase III pivotal trials for <unk> <unk> is an innovative and very promising.

Andy Plump: fazirsiran is an innovative and very promising RNA interference therapy that may stop the buildup of harmful protein aggregates in the liver, which can cause inflammation, fibrosis, and ultimately liver failure. fazirsiran has the potential to reduce the inflammation and fibrosis and prevent liver failure in patients with alpha-1 antitrypsin deficiency. We also advanced TAK-861 into phase IIb dose-ranging studies for patients with both narcolepsy type 1 and narcolepsy type 2. While this has been a strong year for pipeline growth, it has not been without its headwinds. Based on feedback from regulatory agencies, we decided not to pursue approval for LIVTENCITY in first-line CMV infections. We continue to believe there was a net positive benefit shown against the standard of care in the frontline trial.

RNA RNA interference therapy that may start to build up the harmful protein aggregates in the liver, which can cause inflammation fibrosis and ultimately liver failure.

<unk> has the potential to reduce the inflammation and fibrosis and prevent liver failure in patients with alpha one antitrypsin deficiency.

We also advanced <unk> into phase <unk> dose ranging studies for patients with both narcolepsy pipeline and narcolepsy type two.

While this has been a strong year for pipeline growth. It has not been without its headwinds based on feedback from regulatory agencies, we decided not to pursue approval for live entity in first line CMV infections. We continue to believe there was a positive net positive benefit shown against the standard of care in the frontline trial.

Andy Plump: After discussions with regulatory agencies, have decided to make the trial results available to transplant physicians via publications but not pursue a label supplement. LIVTENCITY remains the only approved therapy for refractory CMV infection and has made meaningful impact to the lives of patients in the post-transplant setting. In the coming year, we see significant opportunities to further expand our growth in launch products. The potential approval of ENTYVIO subQ in the US for ulcerative colitis and potential approvals for HYQVIA and GAMMAGARD LIQUID in the US for CIDP both represent expansion opportunities for two of our largest franchises. In fiscal year 2022, we also made significant investments to enhance our long-term growth prospects with a number of pipeline-enhancing deals.

But after discussions with regulatory agencies have decided to make the trial results available to transplant physicians via publications, but not pursue a label supplement.

With cancer. He remains the only approved therapy for refractory CMV infection and has made meaningful impact in the lives of patients in the post transplant setting.

In the coming year, we see significant opportunities to further expand our growth and launch products.

Tangela approval of <unk> in the U S for ulcerative colitis and potential approvals for <unk> and Gamma guard liquid in the U S for civ pay both represent expansion opportunities for two of our largest franchises.

In fiscal year 2022, we also made significant investments to enhance our long term growth prospects with a number of pipeline enhancing deals. These include path $2 79, which I will highlight in more detail later in the presentation.

Andy Plump: These include TAK-279, which I will highlight in more detail later in the presentation, fruquintinib, a highly selective oral potent inhibitor of VEGF receptor 1, 2, and 3 with very strong overall survival data in previously treated metastatic colorectal cancer. This program has already been filed in the United States. TAK-227, a potential first-in-class oral celiac disease therapy with strong data in a human gluten challenge study that was recently published in The New England Journal of Medicine. Next slide, please. Through our disciplined prioritization process, we also made a number of strategic and data-driven decisions to prioritize investments in our most promising programs, which further propelled the progression of our pipeline. As a result, we achieved 41 clinical stage-ups and eight approvals from the four major regulatory agencies around the world. We also continue to evolve our strategic focus.

<unk>, a highly selective oral potent inhibitor of VEGF receptor, one two and three with very strong overall survival data in previously treated metastatic colorectal cancer. This program has already been filed in the United States and tax <unk> seven a potential first in class oral celiac disease therapy.

With strong data in the human gluten Challenge study that was recently published in the New England Journal of Medicine next slide please.

Our disciplined prioritization process. We also made a number of strategic and data driven decisions to prioritize investments in our most promising programs, which further propelled the progression of our pipeline as a result, we achieved 41 clinical stage up and eight approvals from the four major regulatory.

Agencies around the world.

We also continued to evolve our strategic focus is an example of our disciplined decision, making we discontinued R&D efforts and add no associated virus or AAV gene therapy. This decision will allow us to focus even more deeply in areas of cell and gene therapy. We believe we can offer transformative therapies to pay.

Andy Plump: As an example of our disciplined decision-making, we discontinued R&D efforts in adeno-associated virus, or AAV, gene therapy. This decision will allow us to focus even more deeply in areas of cell and gene therapy where we believe we can offer transformative therapies to patients and become industry leaders. These include our innovative allogeneic NK and gamma delta cell therapy platforms, as well as next-generation delivery mechanisms for gene therapy. Next slide, 11, please. Depicted here are our late-stage development programs. TAK-755 had strong interim results from our phase III trial in congenital TTP, a rare disease caused by a deficiency of the protease ADAMTS13. TAK-755, our recombinant ADAMTS13 designed to replace this missing enzyme, showed a 60% reduction in the incidence of thrombocytopenic events versus the standard of care. TAK-755 was also better tolerated. Treatment-related adverse events were 9% for TAK-755 and 48% for the standard of care.

<unk> and become industry leaders. These include our innovative allogeneic NK and gamma Delta cell therapy platforms as well as next generation delivery mechanisms for gene therapy next slide 11. Please.

Depicted here are late stage development programs.

750, <unk> had strong interim results from our phase III trial in congenital TTP, a rare disease caused by a deficiency of the party ace at MTS 13.

Tak 755, our recombinant at MTS 13 designed to replace this missing enzyme showed a 60% reduction in the incidence of thrombocytopenia events versus the standard of care.

755 was also better tolerated treatment related adverse events were 9% for Tak 755, and 48% for the standard of care. We are on track for our first filing in the U S.

Andy Plump: We are on track for our first filing in the US. As previously mentioned, we have an exciting late-stage addition to our pipeline in TAK-279, a highly selective oral allosteric TYK2 inhibitor. We will be starting a pivotal development program in psoriasis in fiscal year 2023. Additionally, we will have a phase IIb readout for psoriatic arthritis this fall and are preparing at-risk to start a pivotal development program for these patients in early fiscal year 2024. In parallel, we will be accelerating the development of TAK-279 in Crohn's disease, ulcerative colitis, and systemic lupus erythematosus, as well as exploring a broad range of additional indications. Next slide, 12, please. Now, I'd like to remind you why we are so excited about TAK-279.

As previously mentioned, we have an exciting late stage addition to our pipeline in tact $2 79, a highly selective oral <unk> allosteric <unk> inhibitor.

We will be starting a pivotal development program in psoriasis in fiscal year 2023. Additionally, we will have a phase <unk> readout for Psoriatic arthritis. This fall and are preparing at risk to start a pivotal development program for these patients in early fiscal year 2024.

In parallel we will be accelerating the development of tap two 790, crohn's disease, ulcerative colitis, and systemic lupus erythematosus as well as exploring a broad range of additional indications. So next slide 12. Please.

Now I'd like to remind you why we're so excited about at $2 79, Firstly at <unk> 700, <unk> is over $1 4 million fold selective for <unk> versus the Jack family receptors important for our best in class <unk> inhibitor, given the known safety concerns associated with the JAK inhibitors.

Andy Plump: Firstly, TAK-279 is over 1.4 millionfold selective for TYK2 versus the JAK family receptors, important for a best-in-class TYK2 inhibitor given the known safety concerns associated with the JAK inhibitors. Secondly, as presented at the American Academy of Dermatology in March, TAK-279 has very strong phase II-B clinical data in moderate to severe plaque psoriasis. 33% of patients taking a 30-milligram pill achieved clear skin or PASI 100 with a once-daily administration. In addition to this strong efficacy profile, adverse events were generally low. The most common adverse events were COVID-19 and acne, and importantly, acne and its related forms resolved while patients continued treatment in all but one study participant by week 12.

Secondly, as presented at the American Academy of Dermatology in March at CAD, 279 has very strong phase <unk> clinical data in moderate to severe plaque psoriasis.

33% of patients, taking a 30 milligram <unk> achieved clear skin or passing 100 with a once daily administration.

In addition to the strong efficacy profile adverse events were generally low the most common adverse events for COVID-19 in acne and importantly, acne and its related forms resolve wild patients continued treatment and all button one steady participant at week 12.

Andy Plump: We are looking forward to advancing TAK-279 into two phase III trials in psoriasis and conducting a head-to-head trial against deucravacitinib based on these promising data. The figure at the bottom of this slide shows a high-level timeline of our anticipated clinical milestones over the next two years. Next slide 13, please. I'd like to now focus on our promising mid-stage pipeline. We're quite energized by recent developments in our orexin franchise. Earlier this year, we advanced TAK-861, our oral orexin program, into phase IIb. Thanks to our knowledge of the narcolepsy space, experience with orexin agonists, and close site engagement, we were able to start phase IIb studies in both narcolepsy Type 1 and narcolepsy Type 2 within days of establishing proof of concept. We recently started enrollment in our long-term extension study that will provide valuable insights on both long-term safety as well as efficacy.

We're looking forward to advancing pad two 790 into two phase III trials in psoriasis and conducting a head to head trial against <unk> <unk> based on these promising data.

The figure at the bottom of this slide shows a high level timeline of our anticipated clinical milestones over the next two years next slide 13. Please.

And our focus on our promising mid stage pipeline.

We're quite energized by recent developments in our Orexin franchise earlier. This year, we advanced pack 861, our oral Orexin program into phase two Bay.

Thanks to our knowledge of the narcolepsy space experienced with Orexin agonist and close site engagement, we were able to start phase III studies in both narcolepsy pipeline and narcolepsy type deal within days of establishing proof of concept.

Recently started enrollment in our long term extension study that will provide valuable insights on both long term safety as well as efficacy.

Andy Plump: In addition, we recently presented data for TAK-925, our intravenous orexin agonist at the International Anesthesia Research Society. There is significant unmet need in post-anesthesia recovery due to respiratory depression caused by anesthetics, leading to complications and admission to the intensive care unit. In our study, healthy volunteers recovering from opioid-induced respiratory depression had significant benefits following TAK-925 administration. In this trial, we saw the potential of TAK-925 to reverse respiratory depression while maintaining analgesic effect, thus having the potential to reduce complications. TAK-925 is now recruiting in a large phase II study to explore potential postoperative benefits in patients with obstructive sleep apnea and others at high risk for respiratory complications. We are evaluating accelerated paths to approval in a variety of surgical settings.

In addition, we recently presented data for Tak 905, our intravenous Orexin agonist at the International Anesthesia Research Society.

Significant unmet need in post anesthesia recovery due to respiratory depression caused by anesthetics, leading the complications and admission to the intensive care unit.

In our study healthy volunteers recovering from opioid induced respiratory depression had significant benefits following tackling at 95 administration. In this trial, we saw the potential of <unk> 95 to reverse respiratory depression, while maintaining analgesic effect, thus, having the potential to reduce.

Complications tack 95 is now recruiting in a large phase III study to explore potential post operative benefits in patients with obstructive sleep apnea and others at high risk for respiratory complications, we are evaluating accelerated path to approval.

In a variety of surgical <unk>.

Andy Plump: Next, TAK-227 is a potential first-in-class therapy designed to prevent the immune response to gluten in celiac disease and is now the most advanced program in our celiac disease portfolio. These are the first of many new molecular entities that will emerge from our rich and transformative early to mid-stage pipeline, which we are confident will add to our growing late-stage portfolio. Next slide, 14 please. My last slide. 2022 was a strong year for our pipeline. In addition to the progress already mentioned, we had significant life cycle advances for our marketed growth and launch products. Based on the progress in 2022, in the coming year, we have the potential approval of ENTYVIO subcutaneous in the United States for ulcerative colitis, the potential approval of HYQVIA as a maintenance therapy for CIDP in the US and Europe, potentially a large growth driver for plasma-derived therapy.

Next at Q2, seven as a potential first in class therapy designed to prevent the immune response to gluten and celiac disease and is now the most advanced program in our celiac disease portfolio.

These are the first of many new molecular entities that will emerge from our rich and transformative early to mid stage pipeline, which we're confident will add to our growing late stage portfolio next slide 14. Please my last slide 2022 was a strong year for our pipeline in addition to the.

Progress already mentioned, we had significant lifecycle advances for our marketed growth and launch products.

Based on our progress in 2022 in the coming year, we have the potential approval of Activia subcutaneous and the United States for ulcerative colitis.

The potential approval of <unk> as a maintenance therapy for <unk> in the U S and Europe potentially a large growth driver for plasma derived therapy and a low PCL are mesenchymal stem cell therapy will have a phase III readout, if positive we plan to submit a BLA in the U S for complex <unk>.

Andy Plump: Alofisel, our mesenchymal stem cell therapy, will have a phase III readout. If positive, we plan to submit a BLA in the US for complex perianal fistulas this year. We expect these data to support the concept of cell-mediated closure, which could drive significant growth for Alofisel. Overall, we are pleased with how we progressed the pipeline in fiscal year 2022 and excited about the strong momentum and meaningful advances we can make in 2023. Thank you, and I will now turn it over to Costa.

This year, we expect these data to support the concept of cell mediated closure, which could drive significant growth for <unk>.

Overall, we are pleased with how we progressed our pipeline in fiscal year 2022, and excited about the strong momentum and meaningful advances we can make in 2023.

Thank you and I will now turn it over to Costa.

Costa Saroukos: Thank you, Andy, and hello, everyone. This is Costa Saroukos speaking. Today, I will walk you through the financial highlights of our fiscal 2022 full-year results and our outlook for 2023. Starting with fiscal 2022 results. I am pleased to say that it was an excellent year for the company as we delivered or exceeded management guidance and booked a record JPY 4 trillion in revenue and core operating profit of almost JPY 1.2 trillion. Starting from the top line, core revenue for the full year was JPY 4.03 trillion, or approximately $30.3 billion. Despite the entry of VELCADE generics in May 2022, we delivered solid revenue growth, up 3.5% versus prior year at constant exchange rate, driven by our growth and launch products. These products now represent 40% of total revenue and grew at 19% on a constant exchange rate.

Thank you Andy and Hello, everyone. This is costa <unk> speaking today I'll walk you through the financial highlights of our fiscal 2022 full year results and.

Outlook for 2023.

Starting with fiscal 2022 results I am pleased to say that it was an excellent year for the company as we delivered or exceeded management guidance and booked a record four trillion yen in revenue and core operating profit of almost $1 two trillion yen.

Starting from the top line core revenue for the full year was 403 trillion yen or approximately $13 3 billion U S dollars.

Despite the entry of broker generics in May 2022, we delivered solid revenue growth up three 5%.

This is price.

Constant exchange rates, driven by our AR growth and launch products. These products now represent 40% of total revenue and grew at 19% on a constant exchange rate.

Costa Saroukos: Reported revenue growth was 12.8%, with business momentum and FX upside more than offsetting the impact of a JPY 133 billion gain from the sale of the Japan diabetes business that was booked in Q1 of the prior year. Core operating profit grew at 9.1% at a constant exchange rate to JPY 1.19 trillion, breaking the JPY 1 trillion threshold for the first time in Takeda's long history. Our core operating profit margin was 29.5%, an increase of 1.6 percentage points on a year-over-year basis. This year-on-year margin improvement is an indicator of our financial discipline and our ability to control costs. In fact, at constant exchange rate, our SG&A spend was lower than last year. Reported operating profit grew at 6.4% versus prior year, overcoming the high hurdle set by the gain on the diabetes portfolio in the prior year.

Reported revenue growth was 12, 8% with business momentum and ethics upside more than offsetting the impact of a 133 billion gain from the sale of the Japan diabetes business that was booked in Q1 of the prior year.

Core operating profit grew at nine 1% at constant exchange rate to 119 trillion yen breaking the one trillion yen threshold for the first time in ticket as long history.

And our core operating profit margin was 29, 5% an increase of one six percentage points on a year over year basis.

This year on year margin improvement is an indicator of our financial discipline and our ability to control costs. In fact at constant exchange rate, our SG&A spend was lower than last year.

Reported operating profit grew at six 4% versus prior year overcoming the high hurdles set by the gain on the diabetes.

Costa Saroukos: Free cash flow for fiscal 2022 was JPY 446.2 billion. Excluding the $3 billion upfront payment we made in Q4 for the acquisition of TAK-279 from Nimbus, it would have been JPY 837.3 billion, or $6.3 billion. As a reminder, the total upfront consideration for TAK-279 was $4 billion, and the remaining $1 billion will be paid in H1 of fiscal 2023. We finished March with net debt to adjusted EBITDA of 2.6x. If we exclude the Nimbus upfront payment from the calculation, it would have been 2.3x, meaning we would have achieved the low 2s deleveraging one year ahead of our target. This closes the chapter on the last major financial target from the Shire integration. Going forward, we'll continue to focus on financial discipline and maintaining solid investment-grade credit ratings. We are no longer in a phase of rapid deleveraging.

In the prior year free cash flow for fiscal 2022 was $446 2 billion, but excluding the $3 billion upfront payment. We made in Q4 for the acquisition of pack to seven non from Nimbus, It would've been $837 3 billion yen or <unk>.

3 billion U S dollars as a reminder, the total upfront consideration for <unk> was $4 billion and the remaining $1 billion will be paid in the first half of fiscal 2023.

We finished march with net debt to adjusted EBITDA of two six times, if we exclude the nimbus upfront payment from the calculation. It would have been two three times, meaning we would have achieved the low twos deleveraging one year ahead of our target.

This closes the chapter on the last major financial target from the Shire integration.

Going forward, we will continue to focus on financial discipline, and maintaining solid investment grade credit ratings, but we are no longer in a phase of rapid deleveraging.

Costa Saroukos: After a record year for core earnings in fiscal 2022, we face significant loss of exclusivity headwinds in 2023, making it a challenging year. Momentum of our growth and launch products is expected to largely offset the revenue impact of losses of exclusivity, predominantly from VYVANSE in the US and AZILVA in Japan. However, year-over-year revenue and profit growth will also be impacted by lower expectations for coronavirus vaccines in Japan. In fiscal 2022, we booked almost JPY 60 billion in revenue for NUVAXOVID and SPIKEVAX. We expect the contribution in fiscal 2023 to be minimal. On the OpEx line, we will stay disciplined to limit the margin impact from generic entry of VYVANSE and AZILVA, which are high-margin products. That said, we will not compromise on making the necessary investments in R&D and data and digital to secure long-term competitiveness.

After a record year for core earnings in fiscal 2022, we faced significant loss of exclusivity headwinds in 2023, making it a challenging year.

Some of our growth and launch products is expected to largely offset the revenue impact of losses of exclusivity predominantly from vyvanse in the U S. And then Zorba in Japan, However year over year revenue and profit growth will also be impacted by low expectations for Corona virus vaccine.

In Japan.

In fiscal 2022, we booked over 60 billion gain in revenue for <unk> and Spike backs, but we expect the contract fusion in fiscal 2023 to be minimal on the Opex line, we will stay disciplined to limit the margin impact from generic entry of finance in the silver.

Which are high margin products that said, we will not compromise on making the necessary investments in R&D and data and digital to secure long term competitiveness.

Costa Saroukos: Lastly, importantly, we are updating our capital allocation policy to reflect the achievement of our deleveraging target with a planned dividend increase, our first in 15 years, to underscore our confidence in the mid to long-term growth outlook of the company. Slide 17 shows our results versus full-year guidance for fiscal 2022. We're delighted with our performance as we delivered growth at a constant exchange rate at or above management guidance for revenue and profits. For core revenue, we achieved strong top-line growth of 3.5% at the high end of our guidance for low double-digit growth, driven by our growth and launch products, which more than offset the impact of VELCADE generics from May 2022. Core operating profit grew at 9.1%, also at the high end of our guidance range for high single-digit growth.

Lastly, but importantly, we are updating our capital allocation policy to reflect the achievement of our deleveraging target with the planned dividend increase are first in 15 years to underscore our confidence in the mid to long term growth outlook of the company.

Slide 17 shows our results versus full year guidance for fiscal 2022, we're delighted with our performance.

As we delivered growth at a constant exchange rate at or above management guidance for revenue and profits.

For core revenue, we achieved strong topline growth of three 5% at the high end of our guidance for low single digit growth driven by our growth and launch products, which more than offset the impact of velcade generics from May 2022.

Core operating profit grew at nine 1% also at the high end of our guidance range for high single digit growth.

Costa Saroukos: This strong performance was driven by the expansion of high-margin products, coupled with our OpEx discipline to deliver operating leverage. For core EPS, I'm pleased to say we exceed the guidance of high single-digit growth, growing at 13.9% at constant exchange rate, reflecting strong business performance and a more favorable core tax rate due to recognition of previously unrecognized tax losses. Finally, on free cash flow, the Nimbus deal was not factored into our estimates when we gave a forecast of JPY 650 to 750 billion at Q2 earnings, which itself was an upgrade from the initial guidance of JPY 600 to 700 billion given in May 2022. Including the Nimbus payment we made in Q4, free cash flow for fiscal 2022 was JPY 446.2 billion. However, excluding Nimbus, it would have been JPY 837.3 billion, well exceeding our forecast.

This strong performance was driven by the expansion of high margin products coupled with.

With our opex discipline to deliver operating leverage.

For Q4 core EPS I'm pleased to say, we exceed the guidance of high single digit growth growing at 13, 9% at constant exchange rate, reflecting strong business performance.

A more favorable core tax rate due to recognition of previously unrecognized tax losses.

Finally on free cash flow the Nimbus deal was not factored into our estimates when we gave a forecast of $650 to 750 billion yen at Q2 earnings.

Which itself was an upgrade from the initial guidance of 600 to 700 billion given in May last year <unk>.

Including the Nimbus payment, we made in Q4 free cash flow for fiscal 2022 was $446 2 billion again, however, excluding nimbus it would've been $837 3 billion well exceeding our forecast.

Costa Saroukos: Slide 18 goes into more detail on the full-year 2022 performance versus prior year. As already highlighted, we delivered excellent results this year, driven by business momentum demonstrated in our constant exchange rate growth in the far right column of the slide. If we look at the actual numbers, we also saw a significant tailwind from FX due to the depreciation of the yen, resulting in double-digit reported and core revenue growth and reported in core EPS growth of over 30%. I'd like to highlight again our core operating profit of almost JPY 1.2 trillion, the highest amount in Takeda history, with a 1.6 percentage point year-on-year margin improvement to 29.5%. Core EPS for the year was JPY 558. Let me go into more detail on the full-year revenue performance versus prior year on Slide 19.

Slide 18 goes into more detail on the full year 2022 performance versus prior year as already highlighted we delivered excellent results. This year driven by business momentum demonstrated in our constant exchange rate growth in the far right column of the slide.

If we look at the actual numbers. We also saw a significant tailwind from FX due to the depreciation of the yen, resulting in double digit reported and core revenue growth and reported and core EPS growth of over 30%.

I would like to highlight again, our core operating profit of almost $1 two trillion the highest amount integrate our history with a one six percentage points year on year margin improvement to 29, 5%.

Core EPS for the year was 550 IGN.

Let me go into more detail on the full year fee revenue performance versus prior year on slide 19.

Costa Saroukos: On the left is a waterfall chart for reported revenue, which grew at 12.8% year-on-year, with business momentum and FX favorability more than offsetting the impact of JPY 150 billion in one-off revenue we booked last year related to asset transfers, including the Japan diabetes portfolio and JPY 150 billion of loss of exclusivity impact, most significantly from VELCADE in the US. Core revenue on the right-hand side adjusts the 2021 baseline to exclude the one-off revenue booked from asset transfers last year. You can see that our business momentum, driven by the growth in launch products, delivered 3.5% growth at constant exchange rate, with the additional tailwind of FX raising total core revenue growth to 17.7%.

On the left is a waterfall chart, who reported revenue, which grew at 12, 8% year on year with business momentum and ethics favorability more than offsetting the impact of $150 billion in one off revenue, we book last year related to asset transfers, including the Japan diabetes portfolio.

Palio.

150 billion yen of loss of exclusivity impact most significantly from Velcade in the U S.

Coal revenue on the right hand side adjust the 2021 baseline to exclude the one off revenue book from asset transfers last year.

You can see that our business momentum.

Driven by the growth in wood products delivered three 5% growth at constant exchange rate with the additional powering of ethics, raising total core revenue growth to 17, 7%.

Costa Saroukos: On Slide 20, you can see the key driver of top-line growth is our portfolio of growth and launch products, which generated approximately JPY 1.6 trillion or 40% of total revenue with 19% growth at constant exchange rate. These products added JPY 435.8 billion or $3.3 billion of revenue compared to last year. This is the portfolio driving total company growth this year despite the VELCADE loss of exclusivity, and we expect that continued momentum of these products will allow us to largely offset the impact of loss of exclusivities, including VYVANSE in 2023. Within our five key business areas, GI, our largest area by revenue, grew at 9% on a constant exchange rate basis. This was spearheaded by ENTYVIO, which grew at 15% and is now the number one prescribed biologic for IBD in the US.

On Slide 20, you can see the key driver of top line growth is our portfolio of growth and which products, which generated approximately $1 six trillion or 40% of total revenue with 19% growth at constant exchange rate incrementally.

Incrementally these products added $435 8 billion or $3 $3 billion of revenue compared to last year.

This is the portfolio driving total company growth this year. Despite the broker at loss of exclusivity and we expect that continued momentum of these products will allow us to largely offset the impact of loss of exclusivity as including buybacks in 2023.

Within our five key business areas.

Our largest area by revenue grew at 9% on a constant exchange rate basis. This was spearheaded by <unk>, which grew at 15% and he's now the number one prescribed biologic for IBD in the U S. We will see significant growth potential for interior towards its peak sales estimate.

Costa Saroukos: We will see significant growth potential for ENTYVIO towards its peak sales estimate of $7.5 to $9 billion, and achieved an important milestone with the recent resubmission of the subcutaneous formulation in the US. In rare diseases, we see continued demand and geographic expansion for TAKHZYRO, including recent listings on the NRDL in China to deliver growth of 25%. We have also delivered a very successful launch of LIVTENCITY, with 98% of transplant centers in the US having now initiated therapy on at least one patient, and real-world physician utilization demonstrating longer duration of treatment than we had initially anticipated. PDT Immunology continues to be very strong, with 15% growth, including 16% growth of immunoglobulin and 19% growth of albumin, reflecting strong demand.

Of seven $5 billion to $9 billion and achieved an important milestone with the recent resubmission of the subcutaneous formulation in the U S.

In rare diseases, we see continued demand in geographic expansion protect zoro, including recent listings on the NR deal in China to deliver growth of 25%.

We have also delivered a very successful launch of lip tensity with 98% of transplant centers in the U S. Having now initiated therapy on at least one patient and reward physician utilization demonstrating longer duration of treatment than we had initially anticipated.

PDT immunology continues to be very strong with 15% growth, including 16% growth of immunoglobulin and 19% growth of albumin, reflecting strong demand.

Costa Saroukos: We have continued to expand our plasma donation center network, adding 29 centers in the fiscal year to date, bringing our total global footprint now to 233 centers. I'm very pleased to announce that we have now achieved our target of over 65% increase in plasma supply and manufacturing capacity versus the 2018 baseline, one year ahead of plan. This is despite the COVID-19 pandemic, during which we consistently outperformed the industry and met all our planned commitments to patients. A fantastic achievement by the team and a testament to how successfully we are managing our end-to-end PDT business. We are continuing to make investments in data, digital and technology-led transformation and capacity expansion across the value chain, including plans to increase our donation center network by another 20-plus centers in fiscal 2023, and investments across the manufacturing network, including the recently announced facility we plan to build in Japan.

We have continued to expand our plasma donation center network, adding 29 incentives in the fiscal year to date, bringing our total global footprint now to 233 centers.

I'm very pleased to announce that we have now achieved our target of over 65% increase in plasma supply and manufacturing capacity versus the 2018 baseline one year ahead of plan.

This is despite the COVID-19 pandemic during which we consistently outperformed the industry amid all our client commitments to patients are fantastic.

But by the team and a testament to how successfully we are managing our end to end PDT business.

We are continuing to make investments in data digital and technology led transformation and capacity expansion across the value chain, including plans to increase our donation center network by another 20, plus centers in fiscal 2023 and investments across the manufacturing network, including the recently announced facility we plan to be.

Costa Saroukos: We intend to give an update on our future capacity increase goals at a PDT-focused investor event later in the fiscal year. Oncology is declining year-on-year as expected, given that VELCADE generics entered the US market from May 2022. Excluding VELCADE, the rest of the portfolio grew 5%, driven by ALUNBRIG, EXKIVITY, ADCETRIS, and ICLUSIG. Finally, Neuroscience continues to perform very well, with growth of 12% driven by VYVANSE and TRINTELLIX. As we have previously communicated, we expect generic versions of VYVANSE to launch in the US in August 2023, which means that we do expect the Neuroscience business to decline in the coming year. Finally, the Other segment is declining mainly due to some regional loss of exclusivities in Japan.

Built in Japan.

We intend to give an update on our future capacity increased goals at our PDT focused investor event later in the fiscal year.

Next is oncology.

Which is declining year on year as expected given that velcade generics enter the U S market from May 2022.

Excluding <unk> the rest of the portfolio grew 5% driven by lingering excuse it T etceteras and inclusive.

Finally, neuroscience continues to perform very well with growth of 12% driven by broadband entrant <unk> as we have previously communicated we expect generic versions of <unk> to launch in the U S. In August of 2023, which means that we do not expect the neuroscience sorry, we do expect the U S.

<unk> business to decline in the coming year.

Finally, the other segment is declining mainly due to some regional loss of exclusivity in Japan.

Costa Saroukos: This Other segment now includes our newly launched vaccine, QDENGA, for the prevention of dengue disease, which we are also classifying as our newest growth and launch product. We've already had a number of important approvals, including Brazil, Indonesia, Thailand, and the EU. We look forward to ramping up our vaccine rollout in 2023. The Other segment also includes our COVID-19 vaccines in Japan. These generated almost JPY 60 billion in revenue in fiscal 2022. As we look ahead to fiscal 2023, we expect them to decline based on lower market demand and the Japanese government's canceled purchase order for the NUVAXOVID. As a result, we expect to see minimal revenue contribution from the COVID-19 vaccines in 2023, and therefore, they will no longer be classified as growth and launch products going forward.

This other segment now includes our newly launched vaccine Katanga for the prevention of dengue disease, which we are also classifying as our newest growth and launch product.

We've already had a number of important approvals, including Brazil, Indonesia, Thailand, and the EU and we look forward to ramping up our vaccine rollout in 2023.

The other segment also includes our COVID-19 vaccines in Japan. These generated almost 60 billion yen revenue in fiscal 2022, but as we look ahead to fiscal 2023, we expect them to decline based on lower market demand and the Japanese government's canceled purchase order for the <unk>.

<unk>.

As a result, we expect to see minimal revenue contribution from the COVID-19 vaccines in 2023, and therefore that will no longer be classified as growth and which products going forward.

Costa Saroukos: Moving down to the P&L on slide 21, we show the key drivers of reported and core operating profit performance for fiscal 2022. Reported operating profit was JPY 490.5 billion, growing at 6.4% versus prior year, with business momentum and FX benefits more than overcoming the impact of the sale of the Japan diabetes portfolio, which generated or contributed JPY 131.4 billion to reported operating profit in fiscal 2021. On the right side of the slide, you can see the core operating profit was almost JPY 1.2 trillion, with our growth and launch products, coupled with OpEx discipline, driving a very strong performance of 9.1% growth at constant exchange rate. FX was an additional benefit, resulting in actual core operating profit growth of 24.4%.

Moving down to the P&L on Slide 21, we show the key drivers of reported and core operating profit performance for fiscal 2022.

Reported operating profit was 495 billion growing at six 4% versus prior year with business momentum and ethics benefits moving overcoming.

Impact of the South the Japan diabetes portfolio, which generated who contributed $131 4 billion yen to reported operating profit in fiscal 2021.

On the right side of the slide you can see the core operating profit was almost one two trillion yen with our growth and launch products, coupled with Opex discipline driving a very strong performance of nine 1% growth at constant exchange rate.

FX was an additional benefit resulting in actual core operating profit growth of 24, 4%.

Costa Saroukos: Slide 22 shows our net debt balance compared to the end of March 2022 and demonstrates the continuation of our steady de-leveraging progress from 2.8 down to 2.6 times. Again, this number reflects the JPY 3 billion upfront payment that we made to Nimbus in Q4 for TAK-279. Excluding this payment, we would be at 2.3 times, which is comfortably in the low twos, a target we had set to hit by fiscal 2023 as part of the Shire integration. With this target achieved, we can close out the final chapter of the integration and look ahead to a new phase of capital allocation.

Slide 22 shows our net debt balance compared to the end of March 2022, and demonstrates the continuation of a steady deleveraging progress from two eight down to two six times.

Again this number reflects the $3 billion upfront payment that we made to nimbus in quarter for Flotek to seven nine excluding this payment we would be at two three times, which is comfortably in the low twos target we had set to hit by fiscal 2023 as part of.

The Shire integration.

With this target achieved we can close out the final chapter of the integration and look ahead to a new phase of capital allocation.

Costa Saroukos: Although we continue to make progress with debt repayments in fiscal 2022, paying over JPY 280 billion, the amount of debt on our balance sheet in Japanese yen terms increased over the period due to the depreciation of the yen versus the dollar and the euro, and this movement is captured within the other bar in the chart. As a reminder, the depreciation of the yen also benefited EBITDA, which means the impact of FX on our leverage ratio is minimal. We have structured the currency denomination of our debt to mirror our cash flow, which ensures that over time we'll be able to pay down debt with minimal impact from FX movements. On slide 23, you can see our debt maturity ladder as of March 2023.

Although we continue to make progress with debt repayments in fiscal 2022 paying over 280 billion yen the amount of debt on our balance sheet in Japanese yen terms increased over the period due to the depreciation of the yen versus the dollar and the Euro and this movement is captured within the other bar in the chart.

However, as a reminder, the depreciation of the yen also benefited EBITA, which means the impact of FX on our leverage ratio is minimal.

So we have structured the currency denomination of our debt to mirror, our cash flow, which ensures that overtime, we'll be able to pay down debt with minimal impact from FX movements.

On slide 23, you can see our debt maturity ladder as of March 2023, we paid off a significant amount of debt again this fiscal year, including a total of $1 $2 billion of higher interest USD denominated bonds and 750 million euros of floating rate bonds. We also did.

Costa Saroukos: We paid off a significant amount of debt again this fiscal year, including a total of $1.2 billion of higher interest USD-denominated bonds and EUR 750 million of floating rate bonds. We also did some recent refinancing of 2022 and 2023 Japanese yen-denominated loans with new maturities in fiscal years 2028 and 2030. As a result, we are able to maintain a very comfortable debt maturity profile over the coming years. Importantly, our debt remains at 100% fixed rates with a weighted average interest of approximately 2%. Next, moving to slide 24 and our outlook for fiscal 2023. As we've communicated for some time, fiscal year 2023 will be a challenging year due to loss of exclusivity impacts, including VYVANSE in the US and AZILVA in Japan. In fact, the total revenue impact from generic entry is expected to be approximately JPY 330 billion this coming year.

Some recent refinancing of 2022 and 2023 Japanese yen denominated lines with new maturities in fiscal years 2028 and 2030.

As a result, we are able to maintain a very comfortable debt maturity profile over the coming years and importantly, our debt remains at 100% fixed rate with a weighted average interest of approximately 2%.

Next moving to slide 24.

Outlook for fiscal 2023, as we've communicated for some time fiscal year 2023 will be a challenging year due to the loss of exclusivity impacts, including vyvanse in the U S. And then Zorba in Japan in fact, the total revenue impact from generic entry is expected to be approximately.

<unk> 330 billion this coming year.

Costa Saroukos: While we expect our growth in launch products to offset much of this impact on revenue, we also face the additional headwind from lower expectations from COVID-19 vaccine revenues. Starting with core revenue, we are forecasting JPY 3.84 trillion or a decline of 4.7%. In addition to the loss of exclusivity and coronavirus impact, this also reflects a slight headwind from FX. Excluding that on a constant exchange rate basis, our management guidance is for a low single-digit percent revenue decline. Core operating profit is being impacted by product mix due to high margin products facing generic entry, but we are striving to minimize the impact through OpEx discipline. We still forecast to land above JPY 1 trillion core operating profit in fiscal 2023 with a year-on-year decline in the low tens percentile on a constant exchange rate basis.

While we expect our growth in loyalty products to offset much of this impact on revenue. We also faced additional headwinds from lower expectations from COVID-19 vaccine revenues.

Starting with core revenue, we are forecasting 384 trillion yen or a decline of four 7%. In addition to the loss of exclusivity and coronavirus impact. This also reflects a slight headwind from FX.

Excluding that on a constant exchange rate basis, our management guidance is for a low single digit percent revenue decline.

Core operating profit is being impacted by product mix.

Due to high margin products facing generic entry, but we are striving to minimize the impact opex discipline, we still forecast to land above one trillion yen cooperating property in fiscal 2023 with a year on year decline in the low 10% all on a constant exchange rate basis.

Costa Saroukos: Core EPS is projected to be JPY 434 with a year-on-year decline in the low 20s percentile, reflecting a more normalized tax rate versus the benefit we had in fiscal year 2022. We expect reported EPS to decline by 56%, reflecting some one-time items on top of the headwinds impacting our core numbers, including an expectation for higher restructuring costs and lower financial income. Moving to free cash flow, where we expect to generate between JPY 400 to 500 billion next year. Please note that this forecast reflects JPY 180 billion of CapEx related to the remaining $1 billion US upfront payment for TAK-279, the Nimbus acquisition, and the JPY 400 million we paid to HUTCHMED in April for fruquintinib.

Yeah.

Core EPS is projected to be 434 yen with a year on year decline in the low 20, percents, so reflecting a more normalized tax rate versus the benefit we had in fiscal year 2022.

We expect reported EPS declined by 56%, reflecting some onetime items on top of the headwinds impacting our core numbers, including an expectation for higher restructuring costs and lower financial income.

Moving to free cash flow, where we expect to generate between 400 to 500 billion next year.

Please note that this forecast reflects a 190 billion of capex related to the remaining $1 billion U S dollars upfront payment protect 279, the nimbus acquisition and the $400 million, we paid to <unk> in April .

Costa Saroukos: Adjusting for those bills, you can calculate that free cash flow would be in the JPY 600 to 700 billion range, which is the same as our initial forecast for fiscal year 2022. We believe this guidance demonstrates our ability to weather the storm through the loss of exclusivity headwind in the coming year. Importantly, we are confident in our ability to return to growth in the near term and to continue to grow the business into the future. Underscoring this confidence and supported by our robust cash flow outlook is our decision to adopt a progressive dividend policy with an increase from JPY 180 to JPY 188 in our fiscal 2023 forecast. On the next couple of slides, let me go into a little more detail on the pushes and pulls in fiscal year 2023 forecast.

<unk>.

Adjusting for those deals you can calculate the free cash flow would be in the 600 to 700 billion range, which is the same as our initial forecast for fiscal year 2022.

We believe this guidance demonstrates our ability to weather the storm through the loss of exclusivity headwind in the coming year.

Importantly, we are confident in our ability to return to growth in the near term and to continue to grow the business into the few reach out underscoring the confidence and supported by our robust cash flow outlook is our decision to adopt a progressive dividend policy with an increase from <unk>.

189 to 188.

Our fiscal 2023 forecast.

On the next couple of slides, let me go into a little more detail on the pushes and pulls in fiscal year 2023 forecast.

Costa Saroukos: Starting with revenue on slide 25, you can see that the growth and launch products are expected to offset a significant portion of the JPY 330 billion loss of exclusivity impact. However, we are now expecting the additional headwind of COVID-19 vaccine revenue declining year on year. In fiscal year 2022, we recognized revenue of JPY 58.9 billion from our COVID vaccine program in Japan, higher than our forecast of JPY 50 billion. However, revenue is expected to decline in fiscal 2023 based on outlook for lower demand and the Japanese government cancellation of the Novavax supply contract in February 2023. Previously, we had been expecting COVID-19 vaccine revenues to grow in fiscal 2023, which would have enabled us to maintain total revenue broadly flat on a constant exchange rate basis.

With revenue on Slide 25, you can see that the growth and launch products are expected to offset a significant portion of the 330 billion yen loss of exclusivity impact.

However, we are now expecting an additional headwind of COVID-19 vaccine revenue declining year on year.

In fiscal year 2022, we recognized revenue of $58 9 billion yen from a COVID-19 vaccine program in Japan higher than our forecast of 50 billion yen.

However revenue is expected to decline in fiscal 'twenty three based on outlook for lower demand and the Japanese government cancellation of the Novavax supply contract in February of 2023.

Previously, we had been expecting coronavirus vaccine revenues to growth in fiscal 2023, which would have enabled us to maintain total revenue broadly flat on a constant exchange rate basis. However, this change in vaccine expectation is the main reason why we are now projecting low single digit decline at constant exchange.

Costa Saroukos: However, this change in vaccine expectation is the main reason why we are now projecting low single-digit decline at constant exchange rate. On an actual currency basis, we also expect FX to be a headwind in 2023, resulting in a total revenue decline of -4.7% year-on-year. Slide 26 shows the factors impacting our core operating profit forecast. We have bucketed the loss of exclusivity and coronavirus impact together here, and in total, these do represent higher margin products, which is why the impact on profit growth is more substantial than the impact on revenue. I did want to highlight on this slide that we are continuing to make the necessary investments in R&D, data, and digital to support the long-term growth of the company, but that we are being very disciplined in our approach to OpEx.

Range right.

On an actual currency basis, we also expect FX to be a headwind in 2023, resulting in a total revenue decline of minus four 7% year on year.

Slide 26 shows the factors impacting our core operating profit forecast, we have pocketed the loss of exclusivity and coronavirus impact together here and in total these do represent higher margin products, which is why the impact on profit growth is more substantial than the impact on revenue.

Didn't want to highlight on this slide that we are continuing to make the necessary investments in R&D and data and digital to support the long term growth of the company, but that we are being very disciplined in our approach to opex as you can see from the chart, while we plan to increase R&D investment by four.

Costa Saroukos: As you can see from the chart, while we plan to increase R&D investment by 4%, we expect non-R&D OpEx to be flat year-on-year on a constant exchange rate basis, despite the inflationary challenges that we face. FX is also a headwind to our forecast, in spite of that, we are still projecting to deliver core operating profit of more than JPY 1 trillion in fiscal year 2023. Moving on to slide 27, I want to speak to the updates we are making to our capital allocation policy. You will recall that previously, our policy consisted of three pillars: investing for growth, de-leveraging rapidly, and shareholder returns. As we have shown today, we would have reached low 2x net debt to adjusted EBITDA in March 2023 if we exclude the upfront payment to Nimbus for TAK-279.

Per se, we expect not R&D opex should be flat year on year on a constant exchange rate basis, despite inflationary challenges that we face.

FX is also a headwind to our forecast, but as part of that we are still projecting to deliver core operating profit of more than one trillion yen in fiscal year 2023.

Moving on to slide 27, I want to speak to the Opex, we are making to our capital allocation.

Allocation policy.

You will recall that previously a policy consisted of three pillars investing for growth.

Deleveraging rapidly and shareholder returns.

As we have shown today we.

Would have rates low twos net debt to adjusted EBITDA in March 2023, if we exclude the upfront payment to nimbus protect II seven nine we are really proud of this deleveraging achievement as it reflects on the excellent work, we have been doing day to day to grow revenues, while maintaining strong opex discipline and continuing to invest in.

Costa Saroukos: We are really proud of this de-leveraging achievement as it reflects on the excellent work we have been doing day to day to grow revenues while maintaining strong OpEx discipline and continuing to invest in our future growth. We have made great progress in creating a strong financial foundation, and precisely because of that progress, we are now able to enter into a new phase. While focusing on maintaining our solid investment-grade credit ratings, we no longer include de-leveraging rapidly as a core pillar of our capital allocation policy, meaning we can pivot more towards investing in growth and shareholder returns. Investing for growth will continue to consist of strategic investments in internal and external opportunities to enhance the pipeline with the recent Nimbus and HUTCHMED deals as a good example.

Our future growth we.

We have made great progress in creating a strong financial foundation and precisely because of that progress. We are now able to enter into a new phase.

While focusing on maintaining our solid investment grade credit ratings, we no longer include deleveraging rapidly as a core pillar of our capital allocation policy, meaning we can pivot more towards investing in growth and shareholder returns.

Investing for growth, we will continue to consist of strategic investments in internal and external opportunities to enhance the pipeline with the recent nimbus and Hodgkin bills as a good example.

Costa Saroukos: We will also continue to invest in maximizing the potential of our marketed portfolio while maintaining our focus on expanding our Plasma-Derived Therapies business to reinforce our leading position and maximize our growth potential. With regards to shareholder returns, we are adopting a progressive dividend policy, which means our intention will be to increase or maintain the dividend each year going forward. For fiscal 2023, we are raising the dividend to JPY 188 per share from JPY 180 per share. Share buybacks when appropriate, also remain an option for reinforcing shareholder returns, although we do not anticipate implementing a buyback in the immediate future. To close out today's presentation, I'd like to revisit the slide Christophe showed you outlining our long-term commitment to growth and shareholder returns.

We will also continue to invest in maximizing the potential of our marketed portfolio, while maintaining our focus on expanding our plasma derived therapies business to reinforce our leading position and maximize our growth potential.

With regards to shareholder returns, we are adopting a progressive dividend policy, which means our intention will be to increase.

Maintain the dividend each year going forward the incremental amounts may fluctuate, depending on our cash flow outlook and for fiscal 2023, we are raising the dividend to a 188 per share from 180 per share.

Share buybacks when appropriate also remain an option for reinforcing shareholder returns, although we do not anticipate implementing a buyback in the immediate future.

To close out today's presentation I would like to revisit the slide Christophe showed you outlining our long term commitment to growth and shareholder returns.

Costa Saroukos: While fiscal year 2023 will be a challenging year, the headwinds we face are temporary, and we expect to return to sales, profit, and margin growth in the near term. Our growth and launch products continue to deliver strong momentum, representing 40% of our portfolio and growing at 19% at constant exchange rate in fiscal year 2022, and we expect these products to further expand over the coming years, including our newest launch, FIDENZA. On top of that, we expect further launches from our late-stage pipeline such as fruquintinib, TAK-755, and soticlestat in the near term, and TAK-279 and fazirsiran later in the decade. Once VYVANSE and AZILVA are behind us, we anticipate limited loss of exclusivity exposure until ENTYVIO biosimilar launch, potentially as late as 2032.

While fiscal year 2023 will be a challenging year.

The headwinds we face are temporary and we expect to return to sales.

Profit and margin growth in the near term.

Our growth and launch products continued to deliver strong momentum representing 40% of our portfolio and growing at 19% at constant exchange rate in fiscal year 2022, and we expect these products to further expand over the coming years, including our newest launch few Danielle <unk>.

On top of that we expect further launches from our late stage pipeline such as <unk> <unk> 75, five in particular is that in the near term and tact 279 and physician room later in the decade.

Once <unk> are behind US, we anticipate limited loss of exclusivity exposure and two in Tbi Biosimilar launch potentially as late as 2032.

Costa Saroukos: By then, we plan to further build out our pipeline and portfolio through internal R&D efforts as well as asset-specific business development, enabling us to secure long-term growth into the next decade. Meanwhile, we will remain focused on cost discipline with data and digital playing a huge role in how we optimize our cost base and increase productivity, supporting our return to low to mid-30s cooperating profit margins. We're extremely confident in the near term, as underscored by our dividend increase this year, and look forward to delivering growth and shareholder returns over the near, medium, and long term. Thank you. Now we'll open it up for some Q&A.

By then we plan to further build out our pipeline and portfolio through internal R&D efforts as well as asset specific business development, enabling us to secure a long term growth into the next decade.

Meanwhile, we will remain focused on cost discipline with data and digital playing a huge role in how we optimize our cost base and increase productivity supporting a return to low to mid <unk> core operating profit margins.

We're extremely confident in the near term as underscored by our dividend increase this year.

And look forward to delivering growth and shareholder returns over the near medium and long term. Thank you.

We will open it up for some Q&A.

Yeah.

So did they want immuno pharmacology Bush's small will get tight on weight loss.

Christopher O'Reilly: 質問回答者としまして、Christophe、Andy、Costaに加え、Global Portfolio Division PresidentのRamona Sequeira、US Business PresidentのJulie Kim、Japan Pharma Business Unit Presidentの古田ミラノ、PDT Business Unit PresidentのGiles Platford、Global Oncology Business Unit PresidentのTeresa Bittettiも参加しております。ご質問をご希望の方は、Zoomの挙手ボタンをクリックしてお知らせください。順番にご案内します。日本語で参加されている方は日本語でご質問いただき、英語で参加されている方は英語で。通訳機能をオフにしている方は、どちらの言語でご質問いただいても結構です。なお、より多くの方からご質問を頂戴したく、質問はお一人2問までとさせていただきたく存じます。最初にご質問を全ていただけましたら幸いです。どうぞよろしくお願いします。それでは最初のご質問は、シティグループの山口様、お願いします。

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Japan Pharma business unit, President Danone for Etame Donald.

PDT business unit, President North Jive as a plug for the global oncology business unit, President not precipitate demand sound Castillo demos.

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Chemo often state of copper what puts you on oak NGO demand pushed them into the <unk> market for this now.

Now you already all kind of categorical shifts more toward I stuck or just more sturdy numerator also state that I can focus on demos Sunshiny, which small survey data like in Marcellus highlight this.

I was wondering I suppose.

So there are signs scirocco Simona.

I'm a good summer.

Hidemaru Yamaguchi: シティの山口です。聞こえますか？

I mean I see myself.

Christopher O'Reilly: はい、聞こえます。

Hidemaru Yamaguchi: Okay. Thank you very much. This is Yamaguchi from Citi. Two questions, first of all. The first question is, it's just the beginning of March 2024, but because March 2024 is now very clear, investors are interested in March 2025, where the VYVANSE cliff is getting much smaller, but still there is. Do you see March 2025, sales going to grow, I understand that, but operating profit is going to come back to growth as well. That's what you see? That's the first question. The second question is that the Nimbus product, those findings questions, even though it is a great data so far, but do you see there the need to add one more higher dose, like 45 mg per day to boost up the efficacy? There is a good balance of efficacy and side effects. Thank you. That's the second question.

Let me just squamous costs are high.

Guaymas, Okay. Thank you very much for the CMO ferocity.

Or is it based upon two questions first of all the first question was just the beginning of March 24.

Because March 'twenty four is now a very clear.

And besides that interest into my 75 were survivors could if he is getting much smaller but it's still there is so do you see March 35, so that's going to grow I understand that but oh.

Operating profit is going to come back to growth as well.

That's what you see that's the first question the second question.

Our nimbus product those finding a questions even though.

It is a great data so far but do you see there that needs to add one.

So, Ohio those type of 45 milligrams per day, two pushed up of efficacy because of there is a good part of it because some side effects. Thank you that's sick of the question.

Christopher O'Reilly: Thank you, Yamaguchi-san. For the first question on the growth outlook for year ending March 2025, I'd like Christophe to answer that. Your question on TAK-279, whether we would do any further dose finding, I'd like to ask Andy to comment on that.

Thank you Yamaguchi, San I think so.

The first question on the growth outlook for year, ending March 25, I'd like Christophe to answer that on your question on type 279, whether you're doing any further dose finding I'd like to ask Andy to comment on that.

Christophe Weber: Thank you, Yamaguchi-san. It's Christophe. If you look, our growth is very much impacted by VYVANSE, especially because it's such a big product. We have modularized a very significant decline of VYVANSE starting in August 2023. There will still have been an impact on fiscal year 2024, much less than 2023. That's a big parameter, if you like, that we'll have to monitor moving forward. We expect return to growth within near term because we are not 100% sure about the VYVANSE decline. If it is as we have forecasted, we will rebounce in 2024. If, for example, the decline of VYVANSE is less in 2023, more in 2024, it could have an impact on our return to growth. For sure, once the VYVANSE is washed out, if you like, our growth on most product are there.

Thank you Adam and good design is Christoph.

Yes.

If you look.

Our growth is very much impacted by valuable answer, especially because it's such a big quota. We have our model is a very significant decline of available starting in August 2023.

There will still be an impact on the fiscal year before but much more much less than the 23.

But that's a big parameter in July that will have to monitor moving forward. So we expect to return to growth.

<unk> sirona, because we're not 100% sure Budd the violence decline.

If it is honestly, we have forecasted it will rebound in 2004, but for.

For example, the decline of violence is less than 23 more in 2000 and could have an impact on our.

Return to work with for sure once the Vyvanse is is washed out if you like them all.

Christophe Weber: They will continue to grow. We have much less exposure to generic until the introduction of biosimilars of ENTYVIO. We will return to growth in revenue and profit, and our margin will start re-expanding, if you like, toward low to mid 30s as it is our goal.

Our local news product.

We continue to grow we have much less exposure to.

Two two generic until the introduction of Biosimilar also continue so we will return to growth in revenue and profit and our margin with us.

Re expanding if you like towards the low to mid thirties as it is our Albert.

Hidemaru Yamaguchi: Thank you. It's really up to the Vyvanse sales decline speed, which could be quicker or slower. That's going to have a legitimate impact for next fiscal year, which is still unknown. That's what you say?

Thank you so it's really up to the Oh quite a bounce.

Our sales decline in speed, which could be a quick oh, so that's going to hop on regulatory impact of an extra square feet. Just yeah. I know that's what would you say look at our forecast I mean this is our best.

Christophe Weber: Yeah. Look at our forecast. I mean, this is our best assessment at the moment.

Hidemaru Yamaguchi: Right.

Christophe Weber: We'll have to monitor that because Vyvanse is also a controlled substance. It is more complicated than usual. That could have a big swing on our 2023 actual numbers, as well as 2024. At the moment, that's our best assessment. If you have more specific questions on Vyvanse, Julie is here, she can answer as well.

The assessment at the moment.

But we'll have to monitor that because it's a very vantage lessor control substance so.

Complicated unusual.

And that could have a big swing on that on our concentrated free extra the numbers, whether it's with us once before but that's at the moment, that's our best assessment.

If you have more specific questions and violence Julie's chicken chicken answer as well.

Hidemaru Yamaguchi: Thank you.

Andy Plump: Hey. Hello, Yamaguchi. It's Andy. On your question with respect to TAK-279 and dose ranging, a couple of comments. The first is that we feel very confident in the dose range that we have and the 30 mg dose. We're not intending to do additional dose ranging at this point in psoriasis. We feel that with the 30 mg dose, we have a best-in-class molecule with a best-in-class dose. We do think in other indications based on the genetics of TYK2 biology and based on some of the preclinical studies, we think that there's the potential that we may need higher exposures and activity in some diseases, for example, IBD. We'll be considering additional dose ranging in other diseases. The biology is quite complex with TYK2, as you know.

Thank you.

The key tenants Andy So on your question with respect to at <unk> 79 in dose ranging a couple of comments. The first is that we feel very confident in the dose range that we have and the 30 milligram dose and we're not we're not intending to do additional dose ranging at this at this point in psoriasis.

We feel that with the 30 milligram dose we have best in class.

A molecule with a best in class dose.

We do think in other indications based on the genetics of <unk> biology, and based on some of the pre.

Preclinical studies, we think that there's the potential that you may we may need higher exposures and activity in some diseases. For example, IBD. So we'll be doing we'll be considering additional dose ranging in other in other diseases.

The biology is quite complex with <unk> as you know.

Andy Plump: We're talking about the inhibition of multiple pathways, multiple inflammatory pathways, many of which are actually quite difficult to measure in humans. We feel with the 30 milligram dose, we have outstanding 24-hour coverage to support a best-in-class profile in psoriasis.

We're talking about the inhibition of multiple pathways multiple inflammatory pathways, many of which are actually quite difficult to measure in humans and so we feel that the 30 milligram dose we have outstanding 24 hour coverage to support the best in class profile in psoriasis.

Hidemaru Yamaguchi: Thank you.

Christopher O'Reilly: Great. Thank you, Yamaguchi-san. Okay. We would like to take the next question. For the next question, I would like to call on Tony Ren from Macquarie. Tony, please unmute and ask your question.

Thank you.

Yeah.

Great. Thank you Yamaguchi San.

We would like to take the next question. So for the next question I would like to call on Tony ramp from Macquarie.

Tony Ren: Sure. Yeah. Thank you for the opportunity to pose this question. Congratulations on a set of very strong results and achieving your deleveraging target. I think it is slightly ahead of schedule. A couple questions from me. The first one is also on the TAK-279 program. Just wanted to get some understanding on how many trials you guys are looking to run. I think looking at the slide, just give me one second, going back to the slide here. I think if I look at slide 12, looks like you guys are proposing two trials, plus a head-to-head trial against an opponent, likely deucravacitinib. I just want to understand your thinking on that. Perhaps, a little bit also on the dose.

Tony Please on mute and ask your question.

Sure Yeah. Thank you for the opportunity to pose this question and congratulations on a set of very strong results and.

Achieving your deleveraging target I think slightly ahead of schedule.

So a couple questions from me. So the first one is also on the TIK two Tac 279 program.

So just wanted to get some understanding on that.

How many trials you guys are looking to run.

I think looking at slide.

I think it's slide.

Give me one second going back to the slide here.

I think if I look at slide 12 looks like you guys are proposing.

Two.

Two trials.

Plus a head to head trial against.

Against.

An opponent likely <unk>. So I just wanted to understand your thinking.

On that.

Tony Ren: You guys circled the 30 milligram dose on slide 12, is that the dose you guys are thinking about taking into your phase III studies? This is probably more of a business question, not a clinical development question. Will you guys put the TAK-279 under the GI business unit? That's on TAK-279. About your ENTYVIO subcu submission that you guys handed in to the US FDA in April. I recall this application was rejected by the US FDA related to the injection device back in 2019. Just want to understand how important do you think this will be in possibly delaying biosimilar competition?

And perhaps a little bit also on the dose.

You guys circle.

30 milligram dose on that slide 12, so is that that bill as you guys are thinking about taking.

<unk> phase III studies.

And also will this is a couple of more of a business question not a not a clinical development question, where are you guys put the attack to 79.

Hi.

AI business you'd net so that's how I'd tack to 79.

So how about your Entyvio sub Q submission that you guys are handling to the U S. FDA in April .

Recall.

This application was rejected Nevada U S. FAA FDA related Attunity injection device back in 2019, so I just want to understand how important.

Do you think this will be in possibly delaying.

Biosimilar competition.

Christopher O'Reilly: Great. Thank you, Tony. I think the first question on the study plans for TAK-279, if Andy could kindly comment on that. On the subcutaneous for ENTYVIO, I don't know, maybe perhaps Andy, maybe also Julie might want to add some comments on that from the US business perspective as well.

Great. Thank you Tony So I think the first question on the <unk>.

The study plans.

Type 279, sandy could kind of comment on that.

And then on the subcutaneous for Entyvio auto maybe perhaps R&D, but then maybe also Julie might want to add some comments on that from the U S business perspective as well.

Andy Plump: Great. Thanks, Chris, and thanks, Tony. TAK-279 is hands down our most heavily resourced program at this point, and we have a project team that underneath it has a group that's focusing in dermatology, in inflammatory disorders, and then in exploring a range of additional disorders. In terms of the number of studies, it'll be quite significant. Firstly, we'll be running a half dozen phase I studies this year to support the overall program and registration across multiple indications. I know that's not what you're asking, but those are critical as we move forward to filing to understand activity in special populations, to understand drug interactions, et cetera, all part of a regulatory package. For psoriasis, we'll start two phase III studies this year. We'll start a head-to-head study around deucravacitinib next year minimally.

Great. Thanks, Chris and thanks, Thanks, Toni so.

So <unk> is hands down our most heavily resource program at this point and we have a project team that underneath it has a group that's focusing in dermatology in inflammatory disorders and exploring additional range of additional disorders in terms of the number of studies.

It will be quite quite significant so firstly, we will be running a half dozen phase one studies this year to support the overall.

Program and registration across multiple indications so those that's not what you're asking but those are critical as we move forward to filing to understand activity and special populations to understand drug drug interactions et cetera are all part of our regulatory package for psoriasis will start to phase III studies this year.

Here, we will start a head to head study around <unk> next year minimally and then for Psoriatic arthritis as I mentioned.

Andy Plump: For psoriatic arthritis, as I mentioned, we were planning at risk for favorable phase II data. We're planning for a phase III study to start early next year. We're also going to be starting phase II-B studies in Crohn's disease, ulcerative colitis, and lupus. Our aspirational goal is to have those studies started in this fiscal year or early next year. It's a very substantive program and by the end of this year, actually, our hope is that we have an ongoing phase III program, multiple ongoing phase II-B programs, phase I studies to support registration, and then an exploratory package to look beyond those five core indications. I think Julie, should I hand it over to you to talk a bit about the business construct for 279 and the ENTYVIO?

We were planning at risk for favorable phase <unk> data. So we're planning for.

Phase III study to start early next year, we're also going to be starting phase <unk> studies in Crohn's disease, ulcerative colitis, and lupus and our our aspirational goal is to have those studies started in this fiscal year early early next year. So it's a very substantive program and by the end of two by the end of this.

This year actually our hope is that we have an ongoing phase II program multiple ongoing piece to be programmed stabilized studies to support registration and then an exploratory package to look beyond beyond those five core indications.

I think Julian J hand, it over to you to talk a bit about the business construct for 279 and the Entyvio.

Tony Ren: Oh, the-

Julie Kim: Sure. Thanks, Andy.

Tony Ren: dose of 30 milligram?

Andy Plump: I'm sorry. Our intent is to move forward with the 30-milligram dose. Of course, that's going to require discussions with regulatory agencies before we have a final decision on dose. Sorry about that, Tony.

D R.

The dose of 30 milligrams I'm, sorry, I'm, sorry, so yes. So our intent is to move forward with the 30 milligram dose of course, that's kind of require discussions with regulatory agencies before we have a final decision.

Tony Ren: Yeah. Great. Thanks.

Decision on dose.

Sorry about that.

Julie Kim: Yes, in terms of the way that we're looking at TAK-279 from a commercial perspective, I'll share a few comments with you. First, when you look at our launch of LIVTENCITY was in a new therapeutic area for us, we were able to build a commercial team and launch that product successfully. We're confident in our ability to build the commercial capabilities to support TAK-279 when it is ready to launch in psoriasis. In addition, we're also very excited about the opportunity for TAK-279 to expand our presence in IBD beyond ENTYVIO.

Great. Thanks.

Yes, and in terms of the way that we're looking at <unk> 79, and a commercial perspective I'll share a few comments that he is first when you look at our launches led Kennedy the tendency was in a new therapeutic area for us and we were able to build a commercial team and launch that product successfully and so we're.

Confident in our ability to build the commercial capability to support tax hit 79.

When it is ready to launch in psoriasis. In addition, we're also very excited about the opportunity or Tac 279.

And our presence in IBD beyond.

Entyvio.

Tony Ren: About the 2019 FDA rejection, was that related to the medical device used for injection? Would this be critical in delaying biosimilar competition till 2032?

Yes.

And about the 2019 FTE.

Rejection was that related to the medical device used for injection.

And would it be would this be critical in agony biosimilar competition until 2032.

Julie Kim: This will not have an impact in terms of delaying biosimilar competition. In terms of the FDA response in 2019, yes, it was related to the device, and there was no concern about the product itself. We're very much looking forward to being able to launch ENTYVIO subQ in the US later this year. It's been doing quite well in other geographies, and Ramona can speak to that if needed.

Okay.

Yes. So this will not have an impact in terms of delaying biosimilar competition, but in terms of the SBA.

Responds in 2019.

Related to the device and there was no concern about the product itself and we're very much or looking forward to being able to launch <unk> in the.

The U S. Later this year.

Doing quite well in other geographies and amount that if needed.

Tony Ren: Okay, great. Thanks. Actually, I also have a question on fruquintinib, but I'm happy to go back to the queue if there are a lot of people waiting.

Okay, great. Thanks.

I also have a question on the Clinton Nab, but I'm happy to go back to the Q filing a lot of people waiting.

Christopher O'Reilly: Thanks, Tony. Maybe we'll move on to another question for now, but we'll come back to you later.

Tony Ren: Sure

Thanks, Tony maybe we'll move on to another question of them out, but we'll come back to you later.

Christopher O'Reilly: if necessary. Thanks, Tony.

Tony Ren: Sure.

Christopher O'Reilly: Okay. I'd like to take the next question then from J.P. Morgan, Wakao-san.

Thanks, Tony.

Okay I'd like to take the next question then from J P. Morgan.

Christopher O'Reilly: J.P. Morgan's Wakao-san. Okay. Thank you, Wakao-san, for your question. The first question was on the outlook for R&D expenses from fiscal 2024 and beyond. What impact that could have on our margin targets. The second question on the criteria for a dividend increase. Maybe I'd like Costa to take these questions and then perhaps, Andy, if you have anything to add, you could jump in later.

Carlson.

David I'm wondering on the alcohol side, yet all of them ourselves Subsellium asset book.

So I think our near the end of the call and all <unk>.

End of <unk> <unk> Tonight, we will kick off with this Scott.

Hey, Noah.

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And then Nicole Thank you Scott.

The question I got on with it.

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The margin in the more mature north San Jose have cut off now cover a knee for the amount of Tanzania fair to online of that initial cost.

Thank you Scott.

It'll all be margin positive, but I think toshi if thats Omega.

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Okay. Thank you <unk> for your question. So the first question was on the outlook for R&D expenses from fiscal 'twenty four and beyond.

And then what impact that could have on our margin targets and then the second question on the criteria for a dividend increase.

Maybe I'd like caused us to take these questions and then ask Andy if you have anything to add.

Costa Saroukos: Yeah. Sorry, Chris. You were breaking up. Can you repeat those questions again?

Jump in later.

Sorry, Chris can you repeat the <unk> can you repeat those questions again, yes, certainly so the first question was on the outlook for R&D expenses from fiscal year 'twenty. Four onwards, obviously, we have with type $2 79 coming into the pipeline is that going to need a significant step up in R&D spend from fiscal 2020.

Christopher O'Reilly: The first question was on the outlook for R&D expenses from fiscal year 2024 onwards. Obviously, we have with TAK-279 coming into the pipeline, is that going to need a significant step up in R&D spend from fiscal 2024? If so, what impact does that have on our target to return to the low to mid-thirties? The second question was on the dividend increase. What would be the criteria of the dividend increases in the future? Is it linked to profit growth, cash flow outlook? What are the criteria?

<unk>.

And if so what impact does that have on our target to return to the low to mid thirties.

And then the second question was on the dividend increase what would be the criteria for dividend increases in the future is it linked to profit growth cash flow outlook what are the other criteria.

Costa Saroukos: Great. Wakao-san, thank you very much for your question. When we communicate returning to our low to mid-30s in the near to medium term, that factors in the incremental investment in R&D, and it also follows the moving pipeline as it progresses as well. In our assumptions, in our financials, it does include that. What we're seeing is very much laser focus on the other operating expenses, in particular SG&A. We're really doubling down on our focus on finding productivity gains there. In fact, like you saw in fiscal year 2022, we did increase R&D, but SG&A was actually declining at a constant exchange rate. We're leveraging data digital technology throughout the value chain. We're seeing improvements in manufacturing, in sales and marketing, and back office G&A.

Right. So thank you very much for your question when we when we communicate the.

Getting back to returning to our low to mid thirties in the need to medium term that factors in the incremental investment in R&D and it also follows the.

Building a pipeline as it progresses as well so in our assumptions in our financials.

Does include that and what we're seeing.

<unk>.

Very much.

Laser focus on.

On the other operating expenses in particular SG&A. So we are really doubling down on our focus on finding productivity gains there.

In fact, what you saw in fiscal year 'twenty, two we did increase R&D, but your SG&A.

SG&A was actually declining at a constant exchange rate with leveraging data digital technologies throughout the value chain, we're seeing improvements in manufacturing.

Costa Saroukos: We'll continue down that path, and we'll, again, align to our capital allocation policy. We're investing for growth, and part of that is definitely investing in R&D, as the pipeline declares itself. At the same time, in fiscal year 2023, we're doubling down on our focus on R&D, factoring in TAK-279, TAK-861, TAK-999, yet the R&D cost is increasing at 4% at a constant exchange rate. Andy is also managing the budget based on prioritization as well. That's really something that we'll continue to keep an eye on. With regards to dividend, we're very much excited about the dividend policy on the capital allocation policy. One reason, as I highlighted, we've been able to really de-leverage faster than what we expected. We did get down to low 2 times, excluding the TAK-279 Nimbus deal.

Sales and marketing and back office G&A. So we will continue down that path and we will again aligned to our capital allocation policy, we're investing for growth.

Part of that is definitely investing in R&D.

As the pipeline declares itself, but at the same time in fiscal year 'twenty three we're doubling down on our focus on R&D.

Factoring into 79861, another attack triple non yet the R&D cost is increasing at 4% at constant exchange rates.

Andy is also managing the budget based on prioritization as well so that's really something that we'll continue to keep an eye on.

With regards to dividend, we're very much excited about the.

<unk>.

The dividend policy on the capital allocation policy. One reason is our highlighted we've been able to.

Really deleverage faster than what we expected. So we did get down to low two times, excluding the $2 79 Nimbus deal.

Costa Saroukos: Off the back of that closes the Shire financial criteria that we had to address. It really switches the focus, and we pivot more towards investing for growth and shareholder returns. This dividend policy, which we've added, is a progressive dividend policy where we increase or maintain each year. The determining factor would be what is determining whether we increase the dividend. There will be some financial metrics that we look at, for example, free cash flow ratio to the dividend and also dividend payout ratios, etc. We will look at all these ratios and make those decisions at the executive team and the board each year and communicate that accordingly. Thank you very much.

Off the back of that.

That causes the Shire financial criteria that we had to address and it really.

Switching the focus and we pivot more towards investing for growth and shareholder returns and this dividend policy, which we've added.

<unk> is a progressive dividend policy, where we increase.

We maintained a G and determinative factor would be.

What is determining whether we increase the dividend there'll be some financial metrics that we look at for example, free cash flow ratio to two.

The dividend and also dividend payout ratios et cetera. So we will look at all these ratios and make those decisions at the executive team aboard each year and communicate that accordingly, Thank you very much.

Seiji Wakao: はい、ありがとうございます。

Christopher O'Reilly: はい、ありがとうございました。それでは次の質問者に移りたいと思います。次はBofA証券の豆棚さん、よろしくお願いします。

I think I asked of them.

Yes.

I think that those I must stop.

So there are some shiny it's pretty tight on warehouse.

<unk> <unk> <unk>.

Glenn and I Cmos.

Koichi Mamegano: BofA証券の豆棚でございます。聞こえますでしょうか。

Christopher O'Reilly: はい、聞こえます。

Koichi Mamegano: ありがとうございます。私から2点ありまして、1点目はPDTでございます。PDTビジネスに関しましては、供給製造能力65%以上を1年前倒しで達成したということで、かなり素晴らしいことかなと思っております。開発品で、TAK-771や881というものが進んでいると思うのですが、これらの開発品がPDTビジネスの拡大のスピードをさらに向上させるかどうか、この点についてまず1点教えてください。2点目なんですけども、2点目はTAK-755についての質問です。cTTPでの良い結果で、現在、アメリカでの申請中ということなんですけども、一方でiTTPの方が少し遅れているような感じなんですけど、こちらの理由について教えてください。以上です。

I don't know that was announced QM official car like Guaymas on Eutelsat mass adult Sky Italia Masters at time of PDT.

Great.

Can you give us I think cosmos to kill curious is on nonaccrual because cobos interject my.

Industrial is also subject to the.

Kennedy on all.

So when I say.

Three months with no.

<unk> latest nanotechnology is took a.

Central time on disk as a mall mcquay dental Mcclatchy sniff morbidity businesses no crocodiles feet also Ronnie also subsidiary called Orca, well nothing too much I don't sit there for that site.

The determinant gizmo.

Kind of an uncle Bonnie fleet and a small.

Net or <unk>.

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Again as I said.

But since it's just a question on the skin.

When you put it.

Keeping our forecast calls for <unk>.

This can all jobs not hearing to dose at the cost side.

Christopher O'Reilly: Thank you for the question. The first question on Plasma-Derived Therapies achieving the 65% capacity a year ahead of plan. What were the drivers for that? Also referring to some of the programs we have in development. For example, TAK-881 in the pipeline and what the potential impact of these could be in the future. I would like to ask Giles to answer that question. The second question was on TAK-755. We've talked about our submission on track in cTTP, but has there been a delay with the iTTP program? If you can provide any comments on that, I'd like to ask Andy to comment on that one.

Yeah.

Thank you for the question. So the first question on plasma derived therapies, achieving the 65% capacity a year ahead of plan.

So what were the drivers for that and then also referring to some of the programs. We have in development. So for example, <unk> 881 in the pipeline and what's the potential impact of these could be in the future I would like to ask Giles to answer that question.

Then the second question was on <unk> 755, we've talked about.

Submission on track and see TTP, but has there been a delay with the <unk> program and if you can provide any comments on that I'd like to ask Andy to comment on that one.

Giles Platford: Yes, thank you very much for the question. This is Giles. We are very happy to announce that we have achieved the commitment that we made in 2019 to expand our capacity between 18 to 23 by more than 65%. We have achieved that one year early, thanks to continued and consistent investment in capacity expansion, both in our plasma sourcing network and across our network of manufacturing sites around the world, combined with improvements in efficiency and productivity.

Yeah.

Yes. Thank you very much for the question this is Charles.

We're very happy to announce that we have achieved the commitment that we made in 2019 to expand our capacity between <unk> 23 by more than 65%. We've achieved one year early thanks to continued and consistent investments in capacity expansion both in our plasma sourcing network.

And across our network of manufacturing sites around the world combined with improvements in efficiency and productivity and we are confident that the investments that are ongoing to expand our capacity and further improve efficiency will support the growth both of our on market portfolio.

Giles Platford: We are confident that the investments that are ongoing to expand our capacity and further improve efficiency will support the growth both of our on-market portfolio, our near-term launches like HYQVIA and CIDP, which is expected to be approved and launch in the US and Europe in fiscal 2023, as well as the launch of our pipeline, including TAK-881, the high concentration facilitated SCIG, which will start phase III study in fiscal 2023. Thank you.

Near term launches like <unk>, which is expected to be approved and launched in the U S and Europe .

In fiscal 'twenty, three as well as the.

The launch of our pipeline, including <unk> <unk> one.

The high concentration facilitated gig.

<unk> will start phase III study in fiscal 'twenty three thank you.

Andy Plump: Mamegano-san, it's Andy Plump. Just on your question with respect to TAK-755. We're on track for submission in cTTP. The results have been quite extraordinary against the standard of care, both in terms of efficacy and safety. On track to submit in the US, plans to expand globally. For ITP, the original proof of concept study that we had done was on top of standard of care, which is quite burdensome, the plasma exchange. It was actually difficult to demonstrate significant differences of the combined therapy. Actually, we're in the process now of starting a second proof of concept study with a very different approach that's intended to fundamentally change the standard of care, where TAK-755 will go up against the standard of care plasma exchange. Plasma exchange is quite burdensome, high volumes, poorly tolerated, variable efficacy.

Yeah.

And then.

<unk>, it's Andy Andy pump just on your question with respect to 75%. So we're on track for submission in TTP. The results have been quite extraordinary against against against the standard of care, both in terms of efficacy and safety.

On track to submit in the U S and then plans to expand globally for IPP.

The original proof of concept study that we had done was on top of <unk>.

Standard of care, which is which is which is quite burdensome the plasma exchange and it's actually difficult to demonstrate.

Significant differences of the combined therapy and actually we're in the process now of starting a second proof of concept study with a very different approach. That's intended to fundamentally change the standard of care, where Tak 755 will go up against the standard of care plasma exchange Hasnt change is quite burdensome high volumes.

Andy Plump: TAK-755, very low injection volume, very well tolerated. We're quite excited to get that study up and running this year and see the results.

Poorly tolerated and variable efficacy and so at 755 very low injection volume very well tolerated. So we're quite excited to get that study up and up and running this year and see the results.

Koichi Mamegano: どうもありがとうございました。

Christopher O'Reilly: はい、ありがとうございました。それでは次のご質問は、Morgan Stanleyの村岡様。ミュート解除してご質問お願いします。

The multiples are nonstop.

Got those I must say there are.

Simona.

Moreover, on Sunday Night, Morocco.

Okay.

Shinichiro Muraoka: こんにちは。Morgan Stanley、村岡です。聞こえていますでしょうか。

Musical quite drastically.

29 months.

Christopher O'Reilly: はい、聞こえています。

To put it on Sunday.

Giles Platford: ありがとうございます。AAV遺伝子治療の開発中止の件なんですけど、確認なんですが、遺伝子治療、細胞治療は続けるけれども、AAVだけをやめるということだと理解したのですが、それで正しいのか、そしてなぜAAVだけをやめるのか、背景を教えてください。それが1つ目。2つ目、PDTの日本での工場設立の件です。日本で工場を作ることのアドバンテージというのは何なのかということを教えてください。コストなのか、レギュレーションなのか、その他に別な理由があるのか。あまり日本で工場を作ってコストアドバンテージって

Great.

Mike or tomorrow.

It's all the same message at all.

It aims to deal no.

Okay, that's too she looking on the schedule.

It is still <unk>.

As a good look at it.

Okay.

Middle to you because some of this stuff is.

So the data that seamless which didn't love it.

Hi.

Hi, Gail.

So you guys put to me.

Thank you Matt.

On the PDP, no even cordial instituted to Kansas.

This.

It's critical to note.

<unk> 99.

We will talk to you took let's say close to normal.

Your days on none.

The funding with menu.

Shinichiro Muraoka: あまり他の産業では聞いたことないので、医薬品でも。その辺り教えてください。

And even the cohorts with that so the one thing.

I would want to thank goodness.

Christopher O'Reilly: Thank you, Muraoka-san. The first question was on the announcement to discontinue researching AAV gene therapy. The question is, will we continue to research other gene therapies and cell therapy? If it's only AAV that we're discontinuing, what is the reason for that? I'd like to ask Andy to comment on that question. The second question on our recently announced new Plasma-Derived Therapies manufacturing facility in Japan, what are the advantages of building that facility in Japan? Is it from a cost basis or a regulatory basis? I'd like to ask Giles to comment on that.

So not that it will stay at that site.

Thank you Bruno so the first question was on the announcement to discontinue.

Research in AAV gene therapy. So the question is will we continue to research other gene therapies and cell therapy, and if its only AAV that we're discontinuing what is the reason for that I would like to ask Andy to comment on that question and then the second question on our recently announced new plasma derived therapies facility manufacturing.

So that's in Japan, what are the advantages of building that facility in Japan is it from a cost basis on a regulatory basis.

Andy Plump: Thanks, Chris, and thanks, Muraoka-san. Firstly, you're correct. We made the focused decision to discontinue AAV gene therapy, but we're still very much engaged in cell therapy, in particular in our human-derived NK and gamma delta platforms, and we have earlier efforts in non-viral gene therapy. The question, why did we decide to discontinue the AAV platform? Two comments. The first is we're always looking at our portfolio and making prioritization decisions to ensure that we're investing in the programs that are most likely to emerge and deliver transforming medicines to patients and drive growth for Takeda. AAV gene therapy has two main challenges. The first is that there are a substantial number of individuals in the population that have neutralizing antibodies to AAV and can never be administered an AAV gene therapy. That's probably somewhere between 30% and 50% of the population.

Giles to comment on that.

Thanks, Chris and thanks, <unk>. So first of all Youre correct. We made the focus decision to discontinue AAV gene therapy, but we're still very much engaged in in cell therapy in particular in our plasma and our human derived NK and gamma delta platforms, and we have earlier.

Hurts in non viral gene therapy.

So the question why did we decide to discontinue the AAV.

Form so two comments. The first is we're always looking at the at our portfolio and making prioritization decisions to ensure that we're investing in the programs that are most likely to emerge and delivered transforming medicines to patients and drive and drive growth for Takeda AAV gene therapy has.

Two two main challenges. The first is that there are a substantial number of individuals in the population that have neutralizing antibodies to AAV and can never be administered in AAV gene therapy, that's probably somewhere in between 30% and 50% of the population and then and then secondly.

Andy Plump: Secondly, there's a limited repertoire of tissues that you can target AAV to. We actually had made great progress in our platform, but as we started to move forward, as we started to recognize some of the cost structures, which have grown considerably over the years, as we started to experience some of the challenges in the external landscape, the regulatory and payer bars started to change to what they were when we started this program four or five years ago. We came to the conclusion that while there's still opportunity, our resources are better invested in other platforms.

There is a limited <unk>.

<unk> of tissues that you can target AAV till we actually had made great progress in our platform, but as we started to move forward as we started to recognize some of the cost structures, which are which are which have grown considerably over the years as we started to.

Experienced some of the challenges in the external landscape, the regulatory and payer bars.

Started to change to what they were when we started this program four or five years ago. We came to the conclusion that what the while there is still opportunity our resources are better invested in other platforms.

Giles Platford: With regards to the question on the investment in an end-to-end manufacturing facility in Japan, plasma-derived therapies remain a high unmet need area in Japan. While demand is growing, timely diagnosis and treatment rates with immunoglobulins are currently much lower than other parts of the world. Regulatory efforts are underway to elevate the standard of care in Japan and introduce more of our global plasma-derived therapies portfolio into Japan through the next decade to improve patient access. This will be our first global plasma facility in Japan, our biggest ever manufacturing investment in the country, and the largest facility of its kind in the country, reflecting our commitment to our long and proud heritage and to Japanese patients.

Okay.

And with regards to the question on the investment and then to a manufacturing facility in Japan.

Plasma derived therapies remains a high unmet need area in Japan, while demand is growing time to diagnosis and treatment rates with immunoglobulins are currently much lower than other parts of the world regulatory efforts are underway to elevate the standard of care.

In Japan, and introduce more of a global plasma derived therapies portfolio into Japan for the next decade to improve.

Patient access this will be our first global plasma facility in Japan, our biggest ever manufacturing investment in the country and the largest facility of its kind in the country, reflecting our commitment to a long and proud heritage and the Japanese patients investment and a state of the art facility with global processes and capabilities.

Giles Platford: Investment in a state-of-the-art facility with global processes and capabilities that fully leverage the latest automation and digitalization technologies will enable us to better serve the growing market in Japan sustainably in line with local requirements to secure local supply, as well as to add incremental capacity to our global network. We'll be the only leading company to have both local and global plasma products in Japan, and the only local fractionator to have a global footprint, bringing greater supply resilience domestically and overseas. I would also say that investment in existing Takeda manufacturing location where we have multiple operations like Japan enables us to find cost-saving synergies and efficiencies by leveraging adjacent infrastructure, services, and relationships. Thank you.

Really leverage the latest automation and digitalization technologies will enable us to better serve the growing market in Japan sustainably in line with local requirements to cure secure local supply as well as to add incremental capacity to our global network. So it will be the only leading company to have both local and global plasma products in Japan.

Local fractionator to have a global footprint, bringing greater supply resilient resilience domestically and overseas.

Yeah.

I would also say that investment in the existing Takeda manufacturing location, where we have multiple operations like Japan enables us to find cost savings synergies and efficiencies by leveraging adjacent to infrastructure services and relationships. Thank you.

Christopher O'Reilly: Thank you very much for the question. Okay. For the next question, we would like to take from TD Cowen, Michael Nedelcovych. Please unmute and ask your question.

Yeah.

Thank you very much for the question.

Okay for the next question, we would like to take from TD Cowen Michael Nadeau Kovich. Please on mute and ask your question.

Michael Nedelcovych: Hi. Thank you for the question. There's been a recent proliferation of oral agents in development for immunology indications, including IBD and dermatology. This would seem to be a near midterm risk to drugs in your portfolio like vedolizumab, especially the subcutaneous formulation, but of course, also an opportunity if those markets do shift more toward oral agents from biologics, given your own development efforts in that space. I'm curious how you think about the competitive landscape across these therapeutic areas over the next, say, five years, and where you see Takeda's participation being most important. Thank you.

Hi, Thank you for the question.

There's been a recent proliferation of oral agents in development for immunology indications, including IBD and dermatology. This.

It seemed to be a near mid term risk to drugs in your portfolio like <unk>, especially the subcutaneous formulation, but of course also an opportunity if those markets do shift more towards oral agents from biologics given your own development efforts in that space. So I'm curious how you think about the competitive landscape across these therapeutic.

Areas over the next say five years, and where you see Takeda as participation being most important.

Christopher O'Reilly: Thank you, Michael, for that question. Perhaps I'd call on Ramona to answer this question.

Thank you.

Thank you Michael for that question, perhaps I'd call on Ramona to answer this question.

Ramona Sequeira: Yes, absolutely. It's Ramona here, Michael. Thanks for the question. That is something that we're keeping a close eye on, really across our therapy areas. Of course, as you mentioned, in IBD and our autoimmune areas in general. That was one of the drivers behind our acquisition of TAK-279. I would say we have a very high bar for efficacy and safety in this space. If we believe something is oral and can come in and really transform the treatment paradigm, that is where we want to focus, and we believe we have that with TAK-279. It's a product that can come in and actually transform the treatment paradigm in psoriasis and the other areas, for instance, IBD, where we'd be investigating it.

Okay.

Yes, absolutely it ceremony here Michael Thanks for the question and.

That is something that we're keeping a close eye on really across our therapy areas, but of course that you mentioned in IBD and.

Our autoimmune areas in general so that was one of the drivers behind our acquisition of <unk> 79.

I would say we have a very very high bar for efficacy and safety in this space. So.

If we believe something is oral and can come in and really transform the treatment paradigm.

That is where we want to focus and we believe we have that with with <unk>. It's a product that can come in and actually transform the treatment paradigm in psoriasis and the other areas for instance, IBD, where we'd be investigating it. However, if we feel something is going to come in as an oral and just provide more convenience, but not really be transformative in the treatment paradigm.

Ramona Sequeira: However, if we feel something is going to come in as an oral and just provide more convenience, but not really be transformative in the treatment paradigm, we are not going to invest and focus there. We're looking at assets across the board, and we're keeping a close eye on things, including the one in development for IBD, as you mentioned, oral vedolizumab. Really, we'd like to see a little bit more data before we determine if that's really going to meet the bar that we have set for efficacy and for transforming the treatment paradigm. Thank you.

We are not going to invest and focus there.

So we're looking at.

Assets across the board and we're keeping a close eye on things, including that the one in development for for for IBD as you mentioned.

But really where we'd like to see a little bit more data before we determine if that's really going to meet the bar that we have set for efficacy and for transforming the treatment paradigm. Thank you.

[Analyst]: Thank you.

Christopher O'Reilly: Thank you very much. Okay, I think we probably have time for one final question, so I would like to call on Miki Sogi from Bernstein to ask her question. Please unmute and ask your question.

Thank you.

Yeah.

Thank you very much okay. I think we probably have time for one final question. So I would like to call on Mickey Soggy from Bernstein to ask a question. Please on mute and ask your question.

Miki Sogi: Thank you very much. I have a couple of questions regarding TAK-279. On page 19, you disclose the high level of the plan for a development program. First of all, my first question is, this head-to-head study, is this a superiority study or a non-inferiority study against the deucravacitinib? Also, the duration of study for this head-to-head appears to be much longer than the other of the phase III studies that you are planning. Is this because of the longer treatment duration, or because of the sample size that require a longer enrollment? Thank you.

Thank you very much.

A couple of question regarding at CAD 279.

So.

On the page 19, you disclosed.

A high level on the plant.

For a development program and can I and the first of all that's my first question is at this at the head to head study. This is superiority study or a non inferiority study against the <unk>.

<unk> and.

Also the duration of study for this <unk> had directv are much longer than.

The other.

Three studies that you are planning at this because of the longer commend duration or because of <unk>.

In the size of DM.

Simplified that require a longer enrollments.

Christopher O'Reilly: Andy, would you like to comment on that?

Andy Plump: Yeah. Sure. Miki, thank you for the question. We haven't finalized the design of the head-to-head study yet. It's our intent to run the head-to-head study because we believe that TAK-279 is a superior molecule, and that we can demonstrate that in a clinical study. Secondly, please don't look at the size of the graphic as an indication of the study timeline. Those are just general indicators as to approximate start times for the various studies.

Thank you.

Andy would you like to comment on that yes sure sure Mickey. Thank you for the question. So we haven't we haven't finalized the design of the head to head study yet, but it's our intent to run the head to head study because we believe.

We believe that <unk> 79, as a superior molecule that we can demonstrate that in a clinical study and then secondly, please.

Please don't look at the size of the of the graphic to as an indication of the study timeline. Those are just kind of general indicators as to approximate start times for the various studies.

Miki Sogi: Thank you.

Christopher O'Reilly: Okay. Thank you for your question. With that, I'd like to bring today's conference call to a close. Thank you very much everybody for participating today, and if you have any follow-up questions, please reach out to the investor relations team. Thank you very much, and have a good evening or a good day.

Yeah.

Thank you.

Okay. Thank you for your question, so with that I'd like to bring todays conference call to a close. Thank you very much everybody for participating today and if you have any follow up questions. Please reach out to the Investor Relations team. Thank you very much and have a good evening or good day.

Yeah.